Behavioral Economics Seminar: The economic value of habits and scale in repeated household behavior – University of Copenhagen

English > Calendar/Arrangementer > Past events > 2016 > BE seminar 29 nov 2016

Behavioral Economics Seminar: The economic value of habits and scale in repeated household behavior

The Behavioral Economics group at Department of Food and Resource Economics (IFRO) invite to open seminars with a range of subjects within Behavioral Economics.

Bring your own lunch, and we provide knowledge and network.

Lars Gårn Hansen, Professor at Department of Food and Resource Economics (IFRO), will present The economic value of habits and scale in repeated household behavior - A field experiment on metered power use.

Abstract

In this paper we investigate shifts in the timing of daily household activities that use metered power, as part of a large field experiment in southern Denmark. We compare treatments that target the same shifting direction every day with treatments that vary randomly, allowing us to quantify the value of being able to form a new consumption habit. We also compare treatments with different intensities of such incentives that allow us to quantify the economies of scale in repeated household behavior. We find that making habit formation possible increases consumer surplus of doing the activity by over 200%. This indicates a substantial economic value of habit formation in the setting we investigate. We also find substantial diseconomies of scale when habits cannot be formed. Our results are particular for the type of behavior and field setting we investigate but they suggest that it may be important to take habits and scale into account when designing policies, products and marketing campaigns that involve repeated household behavior.

For further information, contact:
Catrine Jacobsen, cj@ifro.ku.dk