Consumers Respond to Price More Than Moral Suasion

Consumers Respond to Price More Than Moral Suasion
Consumers Respond to Price More Than Moral Suasion

Japanese customers responded to price incentives but they were also open to moral suasion in asking them to cut back on electricity use during peak hours of the day. A Japanese company, Opower, conducted the experiment after Fukushima, when customers were being asked to cut back on electricity. The results are illustrated in the graph. The green line shows a control group, which was not informed about the need to cut back. The red line represents customers who were told that they would pay higher bills if they kept using during peak hours. Their cutback was significant. The blue line represents customers who received a phone call asking them to please cut back without any financial reward. They reduced consumption to about half the degree that the people who were warned of higher rates. The study found, however, that the response to moral suasion became less effective over time, but cost incentives maintained their effect.

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