The Consumer Subconscious
Schönbrunn Horses by Stewf
You’ll have to forgive yesterday’s satiric look at the government’s new “Homestar” program. I just couldn’t resist the name association.
The press release was fake, but the frustration was real: Why do we need further incentive to do the things that already have a financial benefit?
My suspicion is that the average American homeowner lacks two things: a fundamental understanding of how their house works and an understanding of the time value of money.
First, for many homeowners, the electricity or gas bill may be viewed as a black box, as unintelligible and unalterable as particle physics. They may come to view the “light bill” with the same sense of helplessness as the cable or phone bills.
But the fact is, there are myriad ways you can decrease the amount of that light bill.
Which brings us to the second, and perhaps more important, point. People don’t seem to understand basic concepts of investing. Call it financial illiteracy or chalk it up to our “buy now, pay later” credit consciousness, but any way you slice it, we don’t value future savings with the same salivating excitement as we do the dollar in our pocket.
Chris Hunt, an energy auditor, did a guest post on the Energy Circle blog describing ten ways we could improve homeowner understanding and efficiency improvements.
Communicating Financial Impact Is Critical
People respond to price bargains (even false ones, like 20% off of an elevated price) rather than considering the big picture. At the same time, people can be contradictory. If saving 20% on the audit was the compelling call to action that got them moving, why wasn’t the basic opportunity to save hundreds per year enough to spur action? Homeowners will pay high bills month after month – in part because they do not know what they can do about them. This contradiction extends to the investment in things like windows and renewables. Solar installers are very good at representing a favorable return on investment. But even a 7 year pay back on a $15-30,000 investment feels out of reach for all but the wealthiest home owners. We need to do a better job of communicating the return on investment on some of the less expensive but valuable services we offer.
Chris recommends improved education, a focus on aesthetics, and turnkey installations so that the emotional and intellectual barriers to efficiency are minimized, allowing the financial savings to shine.
Or perhaps all this talk of payback has actually hurt the cause of home improvements. I recently heard building scientist John Straube rail against the current state of the industry. He said that talk about “return on the investment” is often a death knell for energy efficiency, because it opens insulation, HVAC, or window upgrades to a different set of constraints that other home improvements.
He described owners who installed granite heating elements, to keep their countertops from “feeling cold.”
“What is the payback on a warm countertop?” he asked.
And his point is well taken. Perhaps the conversation needs to center around comfort, air quality, and occupant safety, not focus entirely on costs. Efficiency could be sold as a trendy, must-have, keep-up-with-the-Joneses upgrade rather than a geeky, bank-account-draining, albatross.
If the homeowner discovers that she saves a few bucks in the process, so much the better!
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