An Experimental Study of the Effect of Monetary Incentives and Fees on Consumer Energy Behavioral Intentions

Residential electricity consumption is responsible for a significant portion of greenhouse gas emissions each year in the United States. Conserving energy and increasing demand for renewable energy sources are two ways individuals can help reduce the negative impacts of electricity consumption. Research on monetary incentives and fees has demonstrated their potential to encourage pro-environmental behaviors, but knowledge of their effects on sustainable energy behaviors in particular is incomplete. In this chapter, an investigation of three levels of incentives and fees framed to encourage either energy conservation or investment in renewable energy is conducted to determine their effect on consumer energy behavioral intentions. Through a survey that exposed participants to incentives and fees on bill graphics, participants’ perceptions and intended future behaviors were measured. Data were collected about consumers’ willingness to pay to participate in clean energy programs, invest in solar panels, and upgrade to efficient appliances. Results of the survey experiment show that exposure to low levels of incentives and fees significantly increased participants’ intentions to participate in pro-environmental behaviors and willingness to pay for solar panels when compared to a control group, while high incentive and fee values were no longer effective. Moderate and high incentive and fee levels were, however, effective in increasing participants’ perceived costs and benefits from participating in energy-efficient behaviors. Finally, the framing of the incentives and fees was not found to be significantly influential with respect to participant perceptions and intended energy behaviors.