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Malte Küper / Jennifer Potthoff IW-Report No. 45 3. September 2022 How households can save gas: What options are there aside from price?

In view of the current gas emergency, all consumers are urged to reduce their gas consumption. High prices are seen as the most effective incentive to save gas.

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What options are there aside from price?
Malte Küper / Jennifer Potthoff IW-Report No. 45 3. September 2022

How households can save gas: What options are there aside from price?

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German Economic Institute (IW) German Economic Institute (IW)

In view of the current gas emergency, all consumers are urged to reduce their gas consumption. High prices are seen as the most effective incentive to save gas.

However, due to existing contracts, this incentive reaches many households only with a significant delay. Behavioral economical instruments have the potential to stimulate significant gas savings apart from the price. Among others, behavioral economics offers these approaches (“Nudges”) to change gas consumption habits: Self-commitment and specific goal setting, feedback on gas consumption, and the appeal to social norms. Feedback on one's own gas consumption and information on the consumption of comparable neighbors (social comparison) including energy-saving tips (information) could save almost 30 TWh of gas per year in Germany. If designed correctly, nudges can stimulate gas savings, but do not restrict people's freedom of choice and can be implemented in a relatively uncomplicated and cost-effective way for households. As a result, the expected acceptance of these measures is relatively high and social compatibility is ensured. Certain groups can be specifically targeted as the introduction is possible both centrally by the federal government and decentrally by the states, municipalities, cities, neighborhoods and households. However, the selection of measures should be based on cost-benefit analyses. In order to realize gas savings from private households as quickly as possible, long-lasting and in large quantities, we recommend policymakers to implement behavioral incentives (nudges) as an effective supplement to price signals. To maximize potential savings effects also individual nudges, such as social norms and regular feedback on consumption, can be combined. Given the current gas emergency, every single percent of gas savings is a valuable contribution to counteract the energy crisis.

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What options are there aside from price?
Malte Küper / Jennifer Potthoff IW-Report No. 45 3. September 2022

How households can save gas: What options are there aside from price?

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German Economic Institute (IW) German Economic Institute (IW)

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