Nudging Household Adoption of Time-of-Use Electricity Flexible Rate Plan in China: The Effect of Setting Defaults and Framing Messages

Abstract

Time-of-use flexible rate plans charge varying prices for electricity use by hour of day to discourage on-peak use and encourage off-peak use. Residential uptake of these plans may benefit themselves and contribute to the transition to low-carbon economy. The current take-up rate in Chinese households remains suboptimal. Setting defaults and framing messages are popular low-cost strategies informed by behavioral economics to promote consumer behavior change. However, little existing literature examines their effectiveness in enhancing the plans acceptance in Chinese residents. Using an online survey data over 2,860 respondents, this paper finds that, setting the default choice to enroll in the TOU plans noticeably increases willingness to adopt. Moreover, people’s intention to participate grow remarkably after receiving information on the potential economic benefits of uptake. Furthermore, economically-loss framing (describing missed potential savings if not involved) is discovered to be more effective than gain-framing. Implications for designing better promotional information are discussed.

JEL Classification: D12