Are smart meters always a smart idea?

You need to be careful with incentive programs that aim to change behaviour by providing consumers with feedback on, for example, their level of electricity consumption.

Husband and wife academics at UCLA, Matthew Kahn and Dora Costa, gave households information about their own consumption of energy and that of their peers (the paper is here – may be gated for some). They found that providing  feedback to green-minded households encourages them to reduce consumption, but it encourages conservative households to increase consumption. They conjecture that when conservatives see that their consumption is less than average, they respond by increasing it in order to be closer to the average.