In this episode, host Mathias Steck, Service Area Manager for Renewables Northern Europe at DNV, is joined by Filippos Anagnostopoulos, co-ordinator for a project called NUDGE Europe, a European Union Horizon 2020 initiative. Together they explore how behavioural science can be used to incentivize people to make positive changes in terms of their energy use. We look at the different types of motivations or ‘nudges’ that people are influenced by when making decisions about their energy usage, including environmental, technological, financial and social concerns, and what this means for the energy transition on a global scale.
MATHIAS STECK Hello and welcome to the 12th series of the DNV Talks Energy podcast, I'm your host, Mathias Steck. In this series, we focus on the ways in which the energy transition is affecting and is influenced by people and communities. And it's the influence that people hold when it comes to reducing carbon that we’ll focus on today. What influences human behaviour and how we use an understanding of it to empower people to make decisions for the benefit of themselves and the planet? Joining me to discuss this topic is Filippos Anagnostopoulos, Coordinator for a project called NUDGE, a European Union Horizon 2020 Initiative. NUDGE’s aim is, in its own words, to systematically assess and unleash the potential of behavioural interventions towards achieving higher energy efficiency, and to use these insights to inform energy policy. We’ll discover what we can learn from an understanding of behavioural science, over how to best incentivize people to make positive changes. We hope you enjoy the episode.
Filippos, many thanks for joining me today.
FILIPPOS ANAGNOSTOPOULOS Hello, Mathias. Thank you for having me on the podcast.
MATHIAS STECK For the benefit of our listeners. Could you give us an introduction to yourself and your career history and your role at NUDGE?
FILIPPOS ANAGNOSTOPOULOS Sure. So, I'm a Senior Associate at the Institute for European Energy and Climate Policy (that’s IEECP) and I'm the coordinator of the NUDGE Project. So, I'm essentially responsible for ensuring the success and quality of this project and the collaboration of actually a very capable team of over 25 people, from 12 organizations. That includes the likes of IMEC (BE), Fraunhofer and so on. I basically started in this field from the European Parliament, working at the office of an MP, and then I also worked in a number of organizations such as the European Climate Foundation, BPIE, Ernst and Young. In my roles I supported the EU level policy-making both advocacy and research activities.
MATHIAS STECK So Filippos, what are NUDGE’s main objectives?
FILIPPOS ANAGNOSTOPOULOS To put it briefly, its main objective is to provide insights to the policymakers on the use of nudging interventions for the energy transition. Now that's the general title. The project more specifically aims to tailor the design of behavioural interventions to individual psychological and contextual variables. So basically, profiling. We also have the objective to execute field trials in which we implement various mixes of behaviour-based interventions to test their effectiveness. We also have the objective to develop a systematic core research protocol that will allow us to do these measurements. And eventually, our final objective as a project is to consolidate the findings from all of our research and pilots and provide recommendations to policymakers and relevant stakeholders, on how to use nudging interventions in the context of the energy transition.
MATHIAS STECK So that sounds like a very exciting field. Can you give us any examples of recent or ongoing studies by NUDGE, and what they tell us?
FILIPPOS ANAGNOSTOPOULOS Perhaps the more pertinent study. Most of the project deliverables will be ready towards the end of the projects, so a year from now. But what we have produced so far, is a very important work, and it's titled Profiling Energy Consumers, the psychological and contextual factors of energy behaviour. So, what we have done there is that we combined three theories, of essentially, how we behave when it comes to using energy. This uses the theory of Planned Behaviour, the Value-Belief-Norm theory and the Prototype Willingness model. So, we combine those we created this survey, we distributed, we analysed data. And basically, what comes out of it is that we have produced six very distinct energy consumer profiles. So, these are six ways to understand our behaviour when it comes to using and saving energy. To give you an example, we see how some of us are motivated mostly by our comfort, or by our financing situation or by social norms. And we see how we can be motivated strongly by environmental concerns, while others for example, can remain completely indifferent. So perhaps closing, the six profiles are: (1) the people who are environmentally conscious and well informed, (2) those who are concerned but are not taking any actions because they are more comfort-oriented, (3) those who are concerned but are lacking the awareness of the specific actions they could take. (4) Then we also have materialistic consumers, who are escaping personal responsibility. (5) We also have consumers who are prone to social influence. And finally, (6) we have indifference and its consumers. Now these are rather long names, but as the project progresses, I think we will find some more catchy titles.
MATHIAS STECK So you mentioned the six different consumer types, and I guess the target at the end will be that they all get on the train of energy transition. So how important is an understanding of the way people behave to helping them reduce their own carbon footprint?
FILIPPOS ANAGNOSTOPOULOS Well, the first thing that becomes very clear is that no message will fit everyone. It's quite important to understand the psychological profile in order to tailor the messages in a way that it resonates and has an effect. So, some of us might be sensitized to change our behaviour, motivated by concern of high energy prices, while others from a feeling of caring for other species or future generations.+++++Yet, despite the motivation, it might not always be easy to know what to do. We see this, for example, in the third profile, I mentioned. Those who are concerned but lacking awareness. In this case, it is very important to offer facilitating nudges, such as information on where to get the information needed or what action someone could take to meet their goals.
MATHIAS STECK So, we hear and have also discussed in this series already that we can see regional differences in energy consumption. I think if you look at different countries, that makes a lot of sense because they are at different development stages of infrastructure, for example, or their industries. But if we talk about behavioural patterns over energy use and sustainability, can you confirm that actually these patterns are also different in different countries and maybe informed by culture?
FILIPPOS ANAGNOSTOPOULOS Yeah. So, we know from literature that behaviour does follow cultural norms. We all take up the behaviours of the culture we were born to and changing this requires effort. It's not something that happens for everyone very easily. In our work, we haven't precisely looked at cultural norms so far. But there are some good resources to look into. So, one that has been studied quite a lot in the past 10 years is the energy cultures framework, that can be consulted. We could talk about what it looks into a bit more. In our research in NUDGE we did survey almost all member states, but unfortunately some had too small of a participation to make statements. For example, we had few responded from Bulgaria. We did some grouping based on geography, and there were differences. Yes, compared to individual attitudes, but we haven't managed to accurately measure the impact of cultural norms.
MATHIAS STECK Right. But you just mentioned we could maybe discuss this cultural map a bit more, do you have a few more insights there.
FILIPPOS ANAGNOSTOPOULOS So, when it comes to energy cultures, you need to think of both the energy practices that we're used to, our cognitive norms and our material culture. So, that means that in order to model or predict or understand the behaviour, we need to see practices. What are our heat settings? How often do we heat? How many rooms are heated, when it comes to house heating, for example? But we also need to look at cultural norms. So, what are our aspirations socially? What is considered comfortable in the house? So, some places across Europe, 19 degrees might be comfortable in other places, it’s 23. And also, what is the available material culture? What are the devices on which we heat? What are the characteristics of the building stock? What are the energy sources and the insulation? So, all of these have an impact on how a person, a family, a society, uses its energy and how easy it is really for them to overcome these barriers in order to save energy.
MATHIAS STECK So there seem to be a lot of influences either from the outside that inform our behaviour. Did your study find anything about the chance of success in actually as an individual, dramatically changing behaviour towards a lower carbon footprint? Is that actually possible?
FILIPPOS ANAGNOSTOPOULOS What we've seen is that perhaps one of the strongest indicator of intent is perceived behaviour control. So, that's essentially the perception of the difficulty of enacting a behaviour. The feeling that something is within our control to accomplish. And that is a much stronger predictor of behaviour than attitudes – attitude would be your financial concern or how comfortable you wish to be. So, knowing that something can happen is the biggest predictor in actually motivating that behaviour. That also means it's important to focus the messaging of NUDGE on very practical aspects. These should be messages that show it is possible to do something and how to do it. An example that perhaps we can discuss later is just-in-time prompts. So, there the users of our service will receive a notification with a very practical suggestion on what to do at that specific moment.
MATHIAS STECK OK, maybe you talk a bit more about this now. That sounds exciting. Just-in-time prompts. What could that be, as an example?
FILIPPOS ANAGNOSTOPOULOS So, let's say you have installed a new device and you're playing around in its settings on your smartphone. At that moment, a specific prompt could come up and say ‘Well, no, how about decreasing the thermostat temperature?’ Or ‘How about you set, leave this at the default option instead of changing it?’ So, prompts as you are engaging and handling with the device? That, of course, gives a much better suggestion on how a person should set up their system, if their stated objective is also to decrease their overall energy consumption. So, for example, one could be that the heating system goes automatically off or at a lower temperature in the evening. That could be a preset.
MATHIAS STECK So setting the thermostat to lower temperatures potentially also could save cost. But how important is actually this factor cost in driving people's behaviour when it comes to being greener? There are so many technologies like electric vehicles, or maybe later switching to hydrogen boilers. Would you think these things are driven by cost?
FILIPPOS ANAGNOSTOPOULOS We see that financial concern is really a big motivator. In the categories that we have drawn up, it essentially cover one quite fully. Yet we cannot say that it is the most important one. Financial concerns can be very well overridden by social norms or by consumers of comfort or by what we mentioned, the perception that something can actually be done. And we see that financial concern doesn't always work. So, we don't have a good understanding of the economics. We see technologies that might have really fast payback periods, not be taken up as fast as expected, either because of concerns over comfort or because there's hesitation to deal with bureaucracy or a complicated installation.
One example from the U.K. -it was a nudging intervention that helped increase the take up of attic installations - was that it was recognized that a lot of people would not renovate their attics because there was basically too much stuff up there. So, the nudging intervention was to recognize these barriers and help with providing some low-cost alternatives to removing all the stuff and allow the insulation to happen. So financial concern? Yes, it is a big motivator, but I wouldn't say it's necessarily the one that has to determine our behaviour.
MATHIAS STECK OK, let's go deeper on this nudging. I would like to learn more about this. Apart from cost how could you incentivize or nudge people to make changes? I mean, they all know the dramatic results of climate change. I think that could be a motivator in itself. But what would be examples for little nudges to make small steps to what the energy transition?
FILIPPOS ANAGNOSTOPOULOS It's important that you serve little and small, because sometimes the big picture can be frightening and we can freeze up. So, what we mentioned earlier, the Just-In-Time prompts. That's what we call a reinforcement nudge. There's also a confronting area of nudging, which essentially reminds people of our consequences. So, in the example of the thermostat, as we are increasing the thermostat from your mobile phone, you can get a prompt saying that this will also increase your energy bill by so many Euros.
There are nudges around social influence, and that is facilitated by enabling a comparison, perhaps for social platforms with other peers. So, from your neighbourhoods, friends or consumers from a similar demographic. Another type of social influence is goal setting and commitment, where citizens might sign a formal commitment to reduce the energy they consume. And of course, there's also reinforcement nudging, which is basically providing feedback and awareness to users on tips and notifications on how to do things. It can be marketing campaigns that help sensitize users and in general, any messaging that will help someone overcome their reservations that they might have about the efficacy of their behaviour. I need to mention there are also nudges based on fear and deception. But as a project, we have decided against using any of those because of the ethical and the moral concerns that we have.
MATHIAS STECK So what could be a nudge of fear and deception?
FILIPPOS ANAGNOSTOPOULOS Fear is definitely a motivator, but once you're are afraid of something, it's very easy to take action. We have refrained from looking into those, but our fear could be a messaging on what might happen in the future. Let's take the recent conflict. We might say that a fear nudge could have been a year ago. What if a conflict happens? Are you prepared for a, b and c? So, that would be a fear-based nudge. A deception nudge would be one where you are shown a graph, but the graph is actually a bit skewed or one axis is unequal. Or even though the percentages are right and the bars are not aligned. Yeah, it was one of our discussions earlier on in the project, that we should better stay away from those, because the manipulation element was something that the consortium didn't feel very comfortable with. And I think for the right reasons.
MATHIAS STECK Moving from manipulation to exact data, coming back to smart technology. You talked a bit about apps already, smart metres are rolled out. For the individual consumer, what would you think, how big the impact of these smart technologies is? Is that something the majority of the people are actually interested in, to then make decisions based on better insights?
FILIPPOS ANAGNOSTOPOULOS Yeah, it's a great enabler. New technologies, the colours that help you visualize, automate are really a great enabler. So, let's take visualization, for example. Visualizing your energy use, something we didn't used to have, and it's very interesting. We all are starting to have some experience of it, and we see that it really improves our understanding of our energy use. And NUDGE, our theoretical model predicts that an increase of energy knowledge, most of the time has a positive impact on our efforts to save energy.
So, we know that this provision of more information increases the chances of energy saving. So, it definitely makes sense. It also allows us for better presets and better automation. Let's take, for example, the aspect of aversion to loss of comfort and our need to control our behaviour. So, nudging interventions should essentially make it more practical to reduce consumption without us feeling that we're losing both control and comfort. Within NUDGE, one of the pilots, which is run by domX and is operating in Greece. What they do is that they install a small IoT device on a legacy gas boiler that plays with its settings and with external temperature and how fast it heats up or heats down. That allows to reduce consumption by over 20 percent actually. And this is done without reducing the comfort of the occupants. So, the occupant says my minimum temperature is 19 or 20 degrees. The temperature will stay at that level, but the overall gas consumption has decreased. This is possible because of new technologies.
So, these tools are very useful and they can also provide solutions for how to reach energy consumers, or for very old buildings that it's sometimes difficult to undertake more drastic measures.
MATHIAS STECK NUDGE’s research, it’s also providing insights to support and inform energy policies. Can you give us some examples of where policy or government intervention, over decarbonization, is being informed by a behavioural science approach?
FILIPPOS ANAGNOSTOPOULOS It's been used extensively. The OECD a few years back, did mention that there are over 200 public and private institutions that apply behavioural insights in their public policy. Most were mentioned in the U.S. and Canada, but perhaps one of the more vocal or well-known teams is the behavioural insights team in the UK, and they apply specifically NUDGE theory to inform policy. So, the example I mentioned earlier on increasing the installation of loft insulation was something that they came up with.
The Sustainable Energy Authority of Ireland also has a similar unit and we also have one at the EU level. So, the European Commission has a competence centre on behavioural insights, and their mission is to support policy making with evidence on human behaviour. And this is also where our research would provide insights.
MATHIAS STECK So, Filippos, in your opinion, what is the right balance between regulations, so enforced change, in other words, and providing people with the tools to make their own choices?
FILIPPOS ANAGNOSTOPOULOS I have thought of that for some time, and of course, they are complementary. My perception is that regulation should lower the barriers that a society is facing in the energy transition and provide safety and reliability to all stakeholders. And then tools should continue to be developed and they should enable businesses and citizens to make informed decisions. So, when I mentioned lowering the barriers, that is, perceived behaviour. Regulation should make it easier for citizens and business to take the right decisions. And the tools should be there to tell everyone how to.
MATHIAS STECK I have one last question for you if we fast-forward 10 years from now. What do you think, how much has behavioural change, that approach you're working on with NUDGE, has brought us along the way of the energy transition into what's net zero?
FILIPPOS ANAGNOSTOPOULOS Predicting is difficult, but we can always imagine. So, nudging could have an important role to play in a number of our applications. One could be, for example, in the use of EVs and the integration with an energy system. So, nudges could help users set the right preferences for when EVs should charge or not, when to provide energy back to the grid, when things could be driven or not, and essentially helping people make decisions based on parameters of the energy system or the grid.
It could also be used in a number of other areas. NUDGE could be used to give us information, remind us of consequences, make us more sensitized to the things that are happening around us, but which we don't always have a view on. So, how does, for example, buying a specific product from far away might impact deforestation? We know of this information, but it's not yet popping up on our smartphone screen.
In general, we're finding a way to get targeted advertising from all sorts of things that don't necessarily make sense, but should these interventions come to us? We will have the freedom still to choose whether to buy a certain product or not, but we will be better informed. So, I find that this very targeted provision of information in the future will help us deal with things like the energy system, agricultural system or various decisions that we might need to make on the spot. And I believe that this is one of the gifts really of NUDGE, you could say.
MATHIAS STECK Filippos, you just mentioned free will. But some people may argue if they have been nudged often enough, that then it may not actually be their free will anymore.
FILIPPOS ANAGNOSTOPOULOS So this is a philosophical debate, and it has reigned for many years. We usually ask it in a binary way. Have we or have we not got free will? Perhaps free will is something that's cultivated. Perhaps, if indeed we are constantly reacting to what's around us where we don't have much of a free will. And yes, in that case, a nudge could be something that, yes, facilitates the behaviour that's beneficial for all. Even though the person didn't explicitly choose it. But then again, this happens almost all of the time with our social media, for example.
However, it also allows us to build. We could have free will and nudging when we decide what to do with information we have been provided. This is not something that falls within the competence of, let's say, behavioural economics. It's much more of a matter of philosophical development of a society. But a person should be able to decide how they respond to their nudge. A nudge doesn't inhibit behaviours, so it doesn't cancel out the free will of someone, but it does allow the default option to be more beneficial for you. Of course, we should be aware of where we're nudged. So, if I have a stated goal that I want to reduce my energy, I will be receiving nudges that help me do that. Otherwise, there might be some ethical questions raised.
MATHIAS STECK Many thanks Filippos has for your time today. It's been an extremely interesting topic to discuss with lots of excellent insights.
FILIPPOS ANAGNOSTOPOULOS It has been a pleasure as well. Thank you very much.
MATHIAS STECK This week's episode explored the habits people have already changed and what still needs to be done to gather global support. We discussed the different types of motivation from environmental concerns, technology, financial and social that people are influenced by when making decisions about their energy usage and what this means for the energy transition on a global scale.
Join us next week as we focus on the power of young people in support of decarbonization.
To hear more podcasts in the series, please visit dnv.com/talksenergy.