{"674714":{"#nid":"674714","#data":{"type":"news","title":"Turning Up the Heat: Georgia Tech Economist Finds Price Has Little Impact on Consumers\u2019 Thermostat Choices ","body":[{"value":"\u003Cp\u003EIn a study by a Georgia Tech economist that could help inform future energy policy, half the participants cranked their thermostats despite knowing exactly how much each extra degree would cost them.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EPrices are typically the first tool used to get people to save energy, noted \u003Ca href=\u0022https:\/\/econ.gatech.edu\/people\/person\/dylan-brewer\u0022\u003EDylan Brewer\u003C\/a\u003E, assistant professor in the Georgia Tech \u003Ca href=\u0022https:\/\/econ.gatech.edu\/\u0022\u003ESchool of Economics\u003C\/a\u003E. As climate change affects communities and utilities transition to sustainable sources, it\u2019s increasingly critical for regulators and utilities to understand exactly how price affects consumers\u2019 energy use.\u003C\/p\u003E\r\n\r\n\u003Cp\u003E\u201cThere\u0027s kind of a puzzle that exists in the literature on energy consumption,\u201d Brewer said. When it comes to most commodities, price drives demand, but \u201cif the price of electricity changes, most people are not very responsive.\u201d He wanted to test the popular theory that inelastic demand is the result of consumers not knowing the exact price of turning up the thermostat.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EIn his 2023 study in the journal \u003Cem\u003EEnergy Policy\u003C\/em\u003E, Brewer surveyed a sample of Americans after a winter of real-time heating decisions. They were presented with different cost scenarios and asked about their \u201cbliss point\u201d \u2014 the temperature at which they\u2019d keep their houses if money were no object.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EAs a Ph.D. student at Michigan State University, Brewer was struck by how many landlords offered \u201cfree heat\u201d during East Lansing\u2019s frigid winters.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EHe saw that when \u201cpeople are not on the hook for a decision, they\u0027re often wasteful. But if they\u0027re paying for their environmental costs, they\u0027re going to conserve.\u201d He focused on this phenomenon in his dissertation and has since launched other projects on the economics of thermostat settings. \u201cIt\u2019s my niche,\u201d he said.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EIn the study, participants knew exactly how much an extra degree of heat would cost them. Yet even at the highest price level ($8 per 5 degrees Fahrenheit), half of them exhibited zero response to price, Brewer reported. On average, doubling heating costs led respondents to say they would lower less than 1 degree Fahrenheit.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EBrewer found that participants with incomes below $50,000 and those living in urban areas were more responsive to price changes, while older participants had less elastic demand.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EIt turns out, Brewer noted, \u201cPeople simply do not like to be cold.\u201d\u003C\/p\u003E\r\n\r\n\u003Cp\u003EThe results are just as relevant for warm-weather states. In Georgia in 2022, 42% of the state\u0027s electricity was used for air conditioning and nearly three in five households with electric heating, according to the U.S. Energy Information Association.\u003C\/p\u003E\r\n\r\n\u003Cp\u003EBased on study results, Brewer noted that utilities confronted with extreme weather or a supply-side disruption might encourage customers to shift electricity usage to off-peak hours rather than assume they\u2019ll be affected by an increase in rates. \u201cIf you have an energy emergency and need to curb energy consumption, this is telling you that prices are not going to do it,\u201d he said.\u003C\/p\u003E\r\n\r\n\u003Cp\u003E\u201cThis is a daily choice that we make,\u201d Brewer said. \u201cGiven that we spend a huge fraction of our time in climate-controlled buildings, these types of heating and cooling issues have pretty large implications.\u201d\u003C\/p\u003E\r\n\r\n\u003Cp\u003E\u0026nbsp;\u003C\/p\u003E\r\n\r\n\u003Cp\u003E\u003Cstrong\u003EWritten by: Deborah Halber\u003C\/strong\u003E\u003C\/p\u003E\r\n","summary":"","format":"limited_html"}],"field_subtitle":"","field_summary":[{"value":"\u003Cp\u003EIn a study by a Georgia Tech economist that could help inform future energy policy, half the participants cranked their thermostats despite knowing exactly how much each extra degree would cost them.\u003C\/p\u003E\r\n","format":"limited_html"}],"field_summary_sentence":[{"value":"In a study by a Georgia Tech economist that could help inform future energy policy, half the participants cranked their thermostats despite knowing exactly how much each extra degree would cost them."}],"uid":"36413","created_gmt":"2024-05-14 16:58:40","changed_gmt":"2024-05-14 17:00:30","author":"pdevarajan3","boilerplate_text":"","field_publication":"","field_article_url":"","dateline":{"date":"2024-05-14T00:00:00-04:00","iso_date":"2024-05-14T00:00:00-04:00","tz":"America\/New_York"},"extras":[],"hg_media":{"673999":{"id":"673999","type":"image","title":"Energy Costs Illustration","body":null,"created":"1715624593","gmt_created":"2024-05-13 18:23:13","changed":"1715705563","gmt_changed":"2024-05-14 16:52:43","alt":"Image of US Dollar on Home Heating instrument depicting home heating costs","file":{"fid":"257462","name":"AdobeStock_660286829-dylan.jpg","image_path":"\/sites\/default\/files\/2024\/05\/14\/AdobeStock_660286829-dylan.jpg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2024\/05\/14\/AdobeStock_660286829-dylan.jpg","mime":"image\/jpeg","size":1460288,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2024\/05\/14\/AdobeStock_660286829-dylan.jpg?itok=ERsvp2Qn"}}},"media_ids":["673999"],"groups":[{"id":"367481","name":"SEI Energy"}],"categories":[{"id":"144","name":"Energy"}],"keywords":[],"core_research_areas":[{"id":"39531","name":"Energy and Sustainable Infrastructure"}],"news_room_topics":[],"event_categories":[],"invited_audience":[],"affiliations":[],"classification":[],"areas_of_expertise":[],"news_and_recent_appearances":[],"phone":[],"contact":[{"value":"\u003Cp\u003E\u003Ca href=\u0022mailto:priya.devarajan@research.gatech.edu\u0022\u003EPriya Devarajan\u003C\/a\u003E | SEI Communications Program Manager\u003C\/p\u003E\r\n\r\n\u003Cp\u003E\u0026nbsp;\u003C\/p\u003E\r\n\r\n\u003Cp\u003E\u003Cstrong\u003EWritten by: Deborah Halber\u003C\/strong\u003E\u003C\/p\u003E\r\n","format":"limited_html"}],"email":[],"slides":[],"orientation":[],"userdata":""}}}