6 March 2010

Can understanding human irrationality help solve our energy problems?

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Hunt Alcott
Behavioral economics is used to examine how consumers make decisions about everything from their life savings to which brands of jam they select in a supermarket. Hunt Allcott, a behavioral economist with a two-year appointment as the Energy and Society Fellow in MIT’s Department of Economics and the MIT Energy Initiative, wants to apply his field’s insights to the realm of energy use.

In the latest issue of Science, Allcott and co-author Sendhil Mullainathan, of Harvard, advocate passage of a bill currently in Congress that would fund more behavioral research about energy consumption. The authors also note initiatives like that of OPOWER, a Virginia company, which has found that the user-friendly energy reports it sends to consumers can influence behavior enough to reduce household energy use by 2 percent, at minimal cost (OPOWER is an affiliate of Ideas42, an MIT-linked think tank to which Allcott also belongs). MIT News spoke with Allcott about how behavioral economics addresses our energy needs.

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