Overwhelmed by Choice (1/2): Consumers and Green Energy

Whilst the companies in the energy sector could always benefit on a commercial level from learning more about how people choose their providers amongst all available options, the growing pressures of climate change present a new avenue that could benefit from analysis. If we want to enable the transition to cleaner energy on a wider basis, we need to understand what drives people’s energy choices, and subsequently learn to create conditions that would make consumers more likely to opt for greener energy providers over all other active competitors, green or not.

The Dangers of Satisficing

To this end, what can behavioral science tell us about how people choose from a wide sample of energy providers? Studies show that when choosing amongst a wide variety of options, people can be prone to what is known as “satisficing”, where consumers choose the first satisfactory option they have, rather than the best one for themselves and for society [1].

From the point of view of evolutionary psychology, this manner of thinking is a good survival strategy, and an economically efficient way of assessing available courses of action. Rather than spending a lot of time and brain power on “optimizing” between these considerations (by choosing the very best option and closely considering all option’s benefits and pitfalls), choosing the first satisfactory one instead saves a lot of cognitive resources. Behavioral science tells us that the brain is wired to take short-cuts, and prioritizes quick and efficient decision making over fully considered and conscious choices.

Unfortunately, in the modern world this often leads to individual decisions that may be harmful on a global scale. For example, consider the leverage that consumers have in their hands to enable energy transition. If the majority of people decide to switch to the energy providers specialized on the sustainable energy (and in many countries this option is widely available), this would immediately bring a lot of resources to cleaner energy sources. However, most consumers prefer to stick to their current provider or choose the first acceptable option without researching comparable green alternatives to minimize the time and effort spent on this decision [2].

The world’s richest and largest providers therefore receive the largest subscriptions, by merit of their prominence and primacy in the eyes of potential consumers, rather than out of any inherent benefits for the consumers themselves, the wider community, or the planet. However, the good news is there are other ways to compensate for the ill-effects of satisficing and use it to the advantage of greener energy providers.

In this article we will explore how the effects of satisficing can be minimized when it comes to consumers choosing their energy provider and how greener options can be promoted. In the next article we will look at the issues facing prosumers, specifically problem of satisficing in decisions about household own energy generation and suggest the behavioral research-based solutions that can help tackle it.