| Practice area: | Behavioural Economics |
|---|---|
| Client: | N/A |
| Published: | 23rd August, 2022 |
| Keywords: | behavioural economics |
Hosepipe bans across England and Wales: time to turn to behavioural insights for managing water use
With England’s water reservoirs at a 25-year low and hosepipe bans being introduced by the majority of water companies, Dr Charlotte Duke and James Suter consider the evidence on the effectiveness of hosepipe bans and recommend harnessing the power of behavioural insights.
Hosepipe bans (also called Temporary Use Bans) are currently the default measure put in place by water companies when water supplies fall below certain levels.
Previous research is mixed on how effective hosepipe bans are. The Environment Agency[i] reported that hosepipe bans introduced in 2012 had minimal impact, reducing water use by between 1 and 2%. However, these bans were short, with very wet weather arriving later in the year. UKWIR[ii] found that bans in 2006 reduced water consumption by between 5% to 9%.
Water customers are generally accepting of the need for bans if there is a serious shortage, but customer acceptance declines sharply if water companies are perceived to be managing water supply irresponsibly.[iii] Research into previous bans[iv] found that while customer awareness of the ban was reasonably high, customers generally didn’t understand which activities were restricted.
Behavioural Insights to reduce water demand
In our May Behavioural Economics In Focus, James Suter and Tiffany Head spoke about behavioural insights and choice architecture, and the power of behavioural economics to influence our everyday decisions.
From saving money, organ donation and fare evasion to paying tax on time and healthy eating, insights from behavioural economics have had substantial impacts on society and the lives of millions. What’s more, behavioural techniques are generally low cost to implement, do not increase prices and do not ban or prevent any behaviour.
So, how can behavioural economists help us manage our water use better?
Harness the power of social proofing
When staying in hotels we’ve probably all seen messages that say ‘Help Save the Environment reuse your towel’. A now well-known study[v] on how we compare our own behaviour to others, found that messaging using ‘social proofing’ – i.e. appealing to peoples’ innate tendency to follow the actions of others – has a powerful impact on our behaviour. By changing the standard message to ‘Join your fellow guests in helping the environment by re-using your towel’, towel re-use jumped by nearly 10%. By adding ‘75% of guests who stayed in this room re-used their towel’, towel re-use jumped another 5%. This is one example of a simple, low-cost intervention with large impacts on behaviour.
In Cobb County USA, the regional water company employed similar social proofing techniques to reduce customer water usage. 30,000 metered customers were sent one of three different messages:
- MESSAGE 1: A tip sheet which provided customers with ways to reduce water (e.g. turn off the tap when brushing your teeth);
- MESSAGE 2: A message requesting help, however small…. “our water use has a large impact of the ability of our waterways to protect the environment…we need your help….act on the tip sheet…every drop counts”;
- MESSAGE 3: Personally addressed message…. “As we enter the summer months, we thought you might be interested in information about your water usage. Your own consumption in June to October was 52,000 gallons. Your neighbours’ average consumption in June to October was 35,000 gallons. You consumed more water than 73% of your neighbours.”
Customer water use was then monitored throughout the summer. Message 1, providing only tips to reduce water, had almost no impact on customer water usage. Message 2, with ‘soft’ social proof, generated a reduction in water use of 2.7%, while the ‘strong’ social proof Message 3 saw a 4.8% reduction on average in household water use, and these effects were still detectable 2 years after the campaign.
Our desire to compare our behaviour to others can help save water in homes. Harness the power of social proofing in customer communications.
Humans respond to losses up to three time more than gains
Perhaps one of the most famous findings from behavioural economics is that we don’t like losses and we invest more effort in avoiding losses than we do to receive equivalent gains.[vi] In fact, the people responsible for this finding won the Nobel Prize in Economics![vii]
Think about your own behaviour…if you lose £5 you probably feel more annoyed than how happy you feel when you find £5 behind the sofa.
Researchers in Australia[viii] found that this technique, referred to in the literature as loss aversion, can be used to encourage the adoption of low carbon footprint heating and cooling technology in people’s homes. The researchers presented homeowners with one of two messages:
- MESSAGE 1: If you replace your current heating and cooling system with a new $2,400 solar energy solution you will save $360 over 6 years compared to your current system.
- MESSAGE 2: By not replacing your current heating and cooling system with a new $2,400 solar energy solution, you are missing out on savings of $360 per year.
Message 1 highlights the savings of switching, also called a ‘gain frame’. Message 2 highlights missing out on savings, known as a ‘loss frame’. Researchers observed a 12% increase in intention to purchase a new system when homeowners were presented with message 2.
Appealing to “losses loom larger than gains” will shift behaviour to a greater degree than appealing to potential savings.
Make the desired behaviour the norm, not the exception
We sometimes have the tendency to highlight desirable behaviour as being a ‘champion for change’ or a ‘Water Hero’. In 2021, Severn Trent called on its customers to put on their metaphorical cape and be water hero. We don’t know how successful this campaign was, but from a behavioural insights perspective this type of messaging makes the desired behaviour the exception rather than the norm.
When it comes to compliance[ix] and driving behaviour in certain direction, messaging that frames the desired behaviour as the normal behaviour is generally more effective than framing it as the exception.
Make water saving the normal behaviour in communications to your customers.
Conclusion
Behavioural insights have shown that how we message and communicate with customers can have profound impacts on their behaviour. A study undertaken by our team in 2018, found that campaigns which harness behavioural insights achieve between a 1% and 5% reduction in household water use.[x] Compare this to 1% to 9% for hosepipe bans and that’s not bad for a low-cost action which doesn’t prevent or ban any behaviour.
Dr Charlotte Duke and James Suter lead the Consumer and Behavioural Team at London Economics, advising private and public sector clients internationally.
They can be contacted on [email protected] and [email protected].
[i] Environment Agency (2013), Quantifying the Impact of Water Company Drought Measures on Water Demand. [ii] UKWIR (2007), Modelling the impact of restrictions on demand during drought. [iii] Yorkshire Water (2018a), Water Restrictions Research. [iv] UKWIR (2013), Understanding the Impacts of Drought Restrictions. [v] Goldstein, Cialdini, Griskevicius (2008), A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels, Journal of Consumer Research, 35, (3). [vi] Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263-291. [vii] https://www.nobelprize.org/prizes/economic-sciences/2002/kahneman/facts/ [viii] Lynch. D., and Martin.P. (2013) Behavioural economics models of household electricity decision making: An application to energy efficiency program evaluation. [ix] http://www.influenceatwork.co.uk/case-studies/reducing-fare-evasion/21 [x] http://www.cmscoms.com/?p=17086