Energy Effic. (2016)

It is usually assumed that policy aimed at encouraging pro-environmental behaviours normally has positive spillover into other domains. However, this is not always true and negative spillover effects can also arise. Daire McCoy and Sean Lyons from Trinity College Dublin analysed data from 2,456 households in Ireland in a randomized-controlled electricity smart-metering trial and found empirical evidence that an intervention targeted to reduce energy consumption actually reduced overall engagement in energy efficiency investments.

Using data from the Irish Commission for Energy Regulation Smart Metering Customer Behavioural Trial, the authors observe that households randomly assigned to one of the three possible groups that received augmented information on their energy consumption (treatment groups) are 23–28% less likely to adopt any energy saving measure over the 12-month trial period compared with those in the control group. This behaviour can have different root causes, but in particular it can be associated with a moral licensing effect: individuals who are secure in the knowledge of their past good behaviour can feel justified in doing ‘something bad’, freed from the anxiety that might otherwise impact their decisions. This reminds us that policy targeting one type of intervention might have unintended consequences on other behaviours.