Testimony of Skip Laitner, Senior Economist, for the House Science Committee hearing on the Contribution of the Social Sciences to the Energy Challenge

This testimony responds to an invitation from the Subcommittee on Research and Science Education to help members explore the relevance of the social, behavioral and economic sciences in shaping a more productive pattern of energy use and a more balanced set of energy policies. Any useful policy assessment clearly must include some form of economic analysis. Prices and incomes do matter in the evaluation of public policy, but they are not all that matter. Technological innovation and market dynamics are among those things that influence our demand for energy-related goods and services. Social norms and structures also play a role. These all, in turn, are shaped by culture, beliefs, values, preferences, habits, and the availability of alternatives.

For the most part, current economic policy models fail to adequately capture the ways in which individual energy consumption patterns change in response to both economic and noneconomic policies and programs. Therefore, policies based on these models have consistently overlooked the energy savings that can be achieved through the accelerated adoption of energy-efficient technologies, changing social preferences, and more energy-aware behaviors. As such, these models have tended to underestimate the energy savings that can be achieved while generally overestimating the costs of achieving increased levels of energy efficiency. The inaccuracy of these models has large and important implications for both energy policy and climate change mitigation policy. There is good news in all of this but, as we shall see, there is work ahead.

Given this circumstance, and based on the available evidence, the American Council for an Energy-Efficient Economy (ACEEE) believes three distinct recommendations are in order. First, and after further review, the Subcommittee should issue a set of findings that confirms our testimony. We think it will send a positive signal to the economics and social science communities that there is clear room for improvement. Second, support the development and funding of a National Energy Efficiency Data Center (NEEDC), which would be a national nonprofit organization whose purpose will be to collect, organize, disseminate and archive energy efficiency and social science statistics, particularly those related to public policies and programs. Finally, more research and greater research funding will provide the means to expand our knowledge and understanding of how human behavior and choice can increase energy efficiency, reduce our energy dependency, and reduce our impact on the global climate while still maintaining a robust economy.