Environmental Economics, Policy and Management Monthly Seminar Series: Charles Corbett

Environmental Economics, Policy and Management Monthly Seminar Series: Charles Corbett
Monday, February 11, 2013 - 12:00pm - 1:00pm
12:00 pm
1:00 pm
Institute of the Environment and Sustainability, Anderson School of Management, Center for Climate Change Solutions, and the Luskin Center for Innovation
(310) 267-5435
Students, Faculty, Staff
Luskin School of Public Affairs
3333 School of Public Affairs Third Floor Conference Room
Los Angeles 90095
Add to calendar
Date: 
Mon, 02/11/2013 - 12:00pm - 1:00pm
Presented By: 
Institute of the Environment and Sustainability, Anderson School of Management, Center for Climate Change Solutions, and the Luskin Center for Innovation
Contact Phone: 
(310) 267-5435

Location

Luskin School of Public Affairs
3333 School of Public Affairs Third Floor Conference Room
Los Angeles 90095
United States
34° 4' 26.1732" N, 118° 26' 20.7492" W
Open to: 
Students, Faculty, Staff

Energy Efficiency in Small and Medium-Sized Manufacturing Firms: Order Effects and the Adoption of Process Improvement Recommendations

 

Suresh Muthulingam, Cornell University, Johnson School of Management

Charles Corbett, UCLA Anderson School of Management

Shlomo Benartzi, UCLA Anderson School of Management

Bohdan Oppenheim, Loyola Marymount University

 

Abstract

Energy Efficiency in Small and Medium-Sized Manufacturing Firms: Order Effects and the Adoption of Process Improvement Recommendations

 

Suresh Muthulingam, Cornell University, Johnson School of Management

Charles Corbett, UCLA Anderson School of Management

Shlomo Benartzi, UCLA Anderson School of Management

Bohdan Oppenheim, Loyola Marymount University

 

Abstract

In many manufacturing operations, profitable energy efficiency opportunities remain unexploited. While previous studies have tried to explain the underinvestment, we focus on how the way in which a portfolio of opportunities is presented in a list affects adoption decisions. We use information on over 100,000 energy saving recommendations made to more than 13,000 small and medium-sized manufacturing firms under the Industrial Assessment Centers (IAC) program of the US Department of Energy (DOE).We find that adoption rates are higher for initiatives appearing early in a list of recommendations. This sequence effect is surprisingly consistent and large: simply moving a recommendation one position lower, at the mid-point of a list, has the same effect on average as increasing upfront implementation cost by at least 17% from the average value. Given this impact of sequence on adoption of individual recommendations, we utilize variations within our data to examine how various sequencing approaches affect adoption at the portfolio level. Sequences in which recommendations are listed from best to worst payback achieve higher potential energy savings given the investments in energy efficiency made by the firms. We also observe a choice overload effect at the portfolio level, but the magnitude of this effect is small.