Improving Energy Demand Analysis (1984) / Chapter Skim
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6 Conclusions and Recommendations
6 Conclusions and Recommendations
Pages 86-104
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From page 86... ...
Still other factors, such as the distinction between appliance list prices and transaction prices and the effects of price changes as distinct from price levels, are significant in economic theory and could be incorporated readily into existing models, even though they have not been in the past. Our analysis shows, in sum, that existing demand models describe the behavioral environment of energy demand only incompletely.
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From page 87... ...
THE ROLE OF FORMAL MODELS Policy analysts sometimes express two erroneous opinions concerning formal energy models: one is that a policy question can be answered simply because it is represented in a model; the other is the obverse -- that a question cannot be answered because no model exists to answer it. Both opinions equate energy policy analysis with formal modeling.
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From page 88... ...
Other research methods, particularly survey methods and exploratory data analysis, have the same shortcoming when their findings are used uncritically to make projections.
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From page 89... ...
When an oil shortage threatens, for example, it makes more sense to find out how much consumers are adding to their inventories by surveying a sample of consumers than by estimating behavior from a model. Sometimes models are used to answer policy questions that they are not equipped to address.
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From page 90... ...
5. For testing purposes, some versions of some models should be "frozen, archived, and then used from time to time without judgmental readjustments to make forecasts and policy analyses that are then tested against new data and against the findings of studies that use other research methods.
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From page 91... ...
Other research methods are required to build this empirical base. THE ROLE OF PROBLEM-ORIENTED RESEARCH Five types of problem-oriented research are surveys, analyses of existing data, natural experiments, controlled experiments, and evaluation research.
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From page 92... ...
. Surveys that explore public responses to the marketing and implementation of conservation programs have shown that consumer protection and convenience are two nonfinancial variables that affect consumer response to financial incentives (e.g., Stern, Black, and Elworth, 1981)
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From page 93... ...
Disaggregated data should be systematically collected on energy use in the commercial and industrial sectors of the economy and on energy prices and equipment stocks. Specialized surveys relating measured energy use and observed investments in energy efficiency to demographic, institutional, and attitudinal factors are also much needed.
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From page 94... ...
, both because they have important nonfinancial features and because consumer responses to the incentives themselves are not well understood. Experimental techniques offer great benefits for policy analysis of conservation programs: controlled field experimentation should be the method of choice for evaluating promising innovations in the implementation of such programs.
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From page 95... ...
The laboratory approach is much cheaper than field experimentation and can be used to screen out alternatives that would almost certainly fail in field trials. Evaluation Research Evaluation research can, at least in principle, allow analysts to learn from what may be the greatest untapped source on information about energy demand -- the thousands of energy programs and policies that have been tried during the last decade.
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From page 96... ...
Although much can be learned from thorough process and outcome evaluation of the experiences of energy programs, we wish to reemphasize that the most reliable information comes from explicitly treating programs and policies as experiments from their beginning. Such an approach requires the creation of a suitable comparison group, randomly assigned if possible, and careful measurement of effects in all groups (fuller accounts of issues in evaluation research design can be found in texts such as Cook and Campbell, 1979)
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From page 97... ...
The most obvious example is the set of marketing and implementation variables that appear to dwarf the effect of financial incentives in energy conservation incentive programs. Evaluation research appears to be the best method for identifying the relevant variables; evaluation research or field experimentation might be useful for estimating their size.
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From page 98... ...
For example, the initial plan for EIA to survey energy use in nonresidential sectors of the economy has not been followed. Understanding energy demand in the industrial and commercial sectors -- the bulk of national energy demand -- is obviously critical for national demand analysis, yet the EIA survey of industrial energy use was abruptly discontinued in 1981, and a planned new survey has not yet appeared.
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From page 99... ...
Without this information, however, researchers cannot take advantage of information available from other sources on such factors as prevailing wind speed and direction, differences in utility rate structures, the exposure of households to local or state conservation programs, or local consumer price indices. Information at the level of three digits of a zip code would allow analysts to assess the effects of local variables more adequately than they now can.
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From page 100... ...
We also wish to emphasize the occasional need to gather representative national data on energy issues on short notice or at relatively little expense. For example, EIA conducted a survey in fall 1979 of the oil-heated households in its national sample to see if people were having trouble obtaining heating oil in the wake of the oil shortage of that year (Energy Information Administration, 1979)
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From page 101... ...
The demand for answers to today's questions today has diverted resources from the more basic task: building a knowledge base for answering policy questions more accurately. Instead, emphasis has been given to elaborating formal models even when their assumptions are poorly tested, the necessary data are lacking, and important variables are not included in them.5 We have noted the important place of formal models in energy analysis, and we believe that because of their great value for forecasting and for identifying effects of policies on disparate parts of the energy system, improving their behavioral foundation is a high priority.
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From page 102... ...
Better analysis requires a serious research and data collection effort driven not only by immediate policy concerns but by a desire to improve understanding of energy use and general theories of consumer behavior. Such an effort implies changes in the use of formal models and other research methods.
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From page 103... ...
For example, to estimate the effect of appliance labels that offer information on energy efficiency, smallscale laboratory experiments might first be used-to determine what information is effective on labels and what presentation formats people consider useful. Field experiments in which labels are used in some locations and not in others would be the best way to get a realistic estimate of how much difference the best available labels make.
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From page 104... ...
Models would help set priorities for other research by identifying unanticipated effects of policies that call for more specific attention and, when a model's output depends critically on the value of a particular parameter and the estimate of that parameter is uncertain, by calling for research or data collection, using other methods, to estimate that value. The most important change that might arise from a multimethod approach, we hope, would be a shift of emphasis in the way energy demand analysis is conducted.
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