Automatically Green

Automatically Green

If the goal is to make the environment cleaner, a simple idea is to make the green option the easy option. And if the goal is to make it really easy, make it automatic.

In many countries, our lives are increasingly accompanied by the equivalent of “green defaults” replacing dirtier ones. Consider motion detectors that turn out the lights when people do not appear to be in the room. In this way, motion detectors create the equivalent of an “off” default. If the default setting on office thermostats is turned down in winter and up in summer, we should expect significant economic and environmental savings—at least if the default setting is not so uncomfortable that people will take steps to change it.

Both policy and technology are making green defaults of this kind readily available. We have seen that inertia is a powerful force. In addition, a green default is a kind of signal. It tells people what it is right to do. When people reject it, they might feel conscience-stricken—and evidence suggests that they often do. There is a general lesson here. Architectural solutions, making things easy or automatic, can have a much bigger impact than asking people to do the right thing.

Now consider a much bigger question: the choice among utility suppliers in places where such choices are available. Typically, the default may not be environmentally friendly; it might even be generated with coal. To use green energy (such as solar or wind), people must seek out relevant information and choose it affirmatively (if it is an option at all). Most do not bother, but what would be the effect of switching to a green default, so that people are automatically green? The evidence is in, and it’s very clear: many more people end up with green energy. They stick with it, even if it’s a bit more expensive.

Vivid findings come from a randomized controlled trial conducted in Germany, specifically testing the effect of a default rule on the use of green energy. The study involved almost forty-two thousand households, participating in a 4.5-week-long trial and randomly assigned to one of two treatments. In the first, people were asked whether they wanted to opt in to green energy; in the second, they were automatically enrolled into a green energy provider but were asked whether they wanted to opt out. In both treatments, green energy was slightly more expensive.

The default rule had a massive effect. Conditional on the purchase of an energy contract, only 7.2 percent of purchased contracts in the opt-in treatment were green. But in the opt-out treatment, a remarkable majority of 69.1 percent of purchased contracts were green. Notably, this effect was robust after controlling for service quality of the chosen contract, base prices of electricity, and unit prices. In Germany as a whole, many providers are now automatically enrolling people in green energy. Field evidence—based not on experiments but on what is actually happening—shows that the nudge really works (in Germany, Switzerland, and elsewhere). In general, most people are not opting out. As a result, the air is a lot less dirty and greenhouse gas emissions are a lot lower.