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Why Do People Invest in Home Energy Upgrades?

Homeowners are likely to consider issues other than cost, a study finds

Posted on Dec 12 2017 by Reuven Sussman

This post originally appeared on the ACEEE blog.

It’s not just about money. People invest in home energy upgrades for a variety of reasons, including reconstruction after heavy storms. Our new report explores their motivations and unveils, based partly on a representative survey of nearly 2,000 homeowners, the best strategies for encouraging them to invest in energy efficiency.

People who invest in home energy upgrades want to save money on their utility bills, but they also want to improve their health, make their homes more comfortable, protect the environment, or mitigate climate change. In some cases, they are more likely to invest in upgrades when home energy assessors explain the non-financial benefits.

Our report, How to Talk About Home Energy Upgrades, shows the framing of these messages matters. For example, the terms comfort or health may not motivate homeowners, but homeowners are motivated to get rid of cold drafts, remove mold, reduce allergy symptoms, and insulate against noise, among other issues.

The optimal messaging is customized to the homeowner. We found that residents of the southern United States, for example, responded best to messages highlighting the specific health and comfort benefits of upgrades. In different regions, other messages are sometimes more effective.

In addition to studying which benefits to highlight, we also tested subtle message-framing strategies. Homeowners were more interested in home energy updates under the following conditions:

They were already committed

When homeowners were asked to imagine that the total cost of energy efficiency upgrades was $3,800 (rather than $2,500), but that they were also already committed to $1,300 in necessary repairs, they were significantly more likely to opt for the additional efficiency upgrade. The total efficiency upgrade cost was still only $2,500, but the willingness to upgrade increased by a small but significant amount when homeowners were first asked to think about the combined $3,800 price tag. This simple reframing shows that the cost of upgrades, in itself, is not the only factor in homeowner decision making.

People make decisions by comparing their options to other similar options. If home energy assessors can influence homeowners’ frames of comparison, then they can influence their home upgrade decisions. This partly explains why the $2,500 efficiency upgrade decision presented above seems more appealing — we encouraged a comparison to a $3,800 option rather than nothing.

Highlight 'stretch' upgrades

We found a similar result when we showed homeowners a list of potential home efficiency upgrades that might be recommended after an audit. Some upgrades had savings-to-investment ratios 12 times higher than the next highest on the list. What effect might this have on a homeowner’s perception of the other items? Well, we found that when we removed those “no-brainer” items from the list, homeowners were significantly more likely to pick the items that were previously neglected.

Non-financial benefits count

Financial factors in home energy upgrade decisions might be less important than commonly thought. When we framed the benefits of home upgrades as being purely financial, homeowners were significantly more willing to invest in them than if we presented no specific benefits of upgrading (a control condition). However, we found a similar effect when homeowners read a message about the health or comfort benefits of upgrading. Selling home energy upgrades based on their health or comfort benefits may be just as effective as touting their financial benefits in some cases.

Indeed, some home energy efficiency experts, marketers, and contractors have suggested for years that home upgrades should not be marketed purely on their cost-saving value. In many cases, the non-financial benefits of home upgrades are greater than the financial benefits, and focusing the conversation with homeowners on finances may limit their options.

The best way to encourage home energy upgrades is to listen to homeowners and learn what motivates them. Recommending upgrades that address their specific concerns maximizes the chances of investment.

For those wanting to learn more about why people do or don’t invest in home energy upgrades from a behavioral science perspective and how to best frame home energy upgrade messages, download our latest report, How to Talk About Home Energy Upgrades. Contractors and home energy assessors may want to download our tip sheet for quick info.

Reuven Sussman is senior research manager in the American Council for an Energy-Efficient Economy's Behavior & Human Dimensions Program.

Image Credits:

  1. BluebearsLani via Flickr

Dec 12, 2017 10:56 AM ET

by John Clark

Overwhelmed comes to mind when I think of what I personally should do. I remember when we looked at trying to fix our HVAC system my spouse balked at the $5k price tag (install a louvered door, run an extra return and rebuild two duct-board plenums). Sure it was expensive, but for her drafty windows and doors can be mitigated with a sweater and slippers for the 3 months that it's really cold.

17 years is a long time to live in a drafty uncomfortable house.

Dec 12, 2017 7:02 PM ET

Edited Dec 12, 2017 7:03 PM ET.

different people want different things
by Erich Riesenberg

When I insulated my house, I put insulation on the interior which reduced floor space. However, I was also able to remove the natural gas furnace which opened up 1/4 of the basement. Replacing with a portable heat pump, for now. And, removed all the duct work, which provided more headroom and storage room in some areas.

I also plan to keep the home for decades, so electricity prices may well rise a lot over the time. Though, our state is heavily with wind power, so maybe not. At least, I avoid natural gas fracking and price variation.

It is important to realize different people have different goals.

Dec 12, 2017 7:23 PM ET

by Scott Barkdoll

The other benefit Of making things so much tighter in home building is reduced Insects No we don't want to guarantee This to customers but all these miles of tape and caulk Certainly cut down on spider an fly housing in the long run I'd think in Cock roach country This couled be a major selling factor.

Dec 14, 2017 10:09 AM ET

by John Clark

"The other benefit Of making things so much tighter in home building is reduced Insects."

- Two large main coon cats on nightly patrol can be very effective. ;)

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