To some extent, all energy policy is designed to change behaviour: From congestion taxes to discourage people from driving in certain parts of the city, to labelling schemes that encourage people to purchase more energy efficient appliances.
However, in many countries policy makers observe a disconnect between the expected outcomes of a policy and the actual outcomes – a policy performance gap. Often, this gap is because people behave differently than the way policy makers had expected.
Energy policy makers—like policy makers in many other fields—often use “rules of thumb” when making policy, which implicitly involve assumptions about human behaviour. A typical example is this:
While this rule of thumb may work in many cases, it is based an assumption about how people respond to prices and ignores other ways people make purchasing decisions. For example, for some people, higher-priced goods might signify better quality. For these people, lowering a product’s price may make it unattractive, the opposite impact intended by the policy.
Examples such as this suggest policy makers should carefully consider evidence from the behavioural sciences when designing policy, to minimise the risk of policy performance gaps.
What are Behavioural Insights?
Behavioural Insights (BI) are designed to help make better and more effective public policies based on evidence on human behaviour drawn from the fields of behavioural economics, psychology and other behavioural sciences.
Research from these fields has shown that behaviour is often not “rational” and that habits are often guided by cognitive “short cuts” which, while useful in many situations, sometimes result in behaviours that differ from expectations.
BI is designed to help policy makers take such factors into account when designing policies, offering a data-driven and nuanced approach to policy making based on what actually drives citizens’ decisions rather than relying on assumptions about how they should act.
The emergence of Behavioural Insights in government and the need for collaboration
Over the last decade, several countries have set up specialised teams to incorporate BI within energy policy development and implementation processes. In some countries, dedicated BI teams have been established within energy or environment departments. In others, BI teams are established in central agencies to apply BI across a portfolio of issues, including energy. In others still, BI analysis has been conducted by private or semi-private organisations, with government as the primary client.
While some countries have been applying BI to energy policy for years, others are just beginning to experiment with it. International collaboration can help ensure that countries share lessons learned and pool their efforts to improve the efficacy of energy policy globally.