American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Smart Thermostats, Automation, and Time-Varying Prices
American Economic Journal: Applied Economics
vol. 17,
no. 1, January 2025
(pp. 90–125)
Abstract
Can automation complement economic incentives? We explore this question by randomly encouraging households to activate a feature on their existing smart thermostat that automates responsiveness to time-of-use electricity pricing. The feature reduces air conditioning use during the highest-priced afternoon period, raising indoor temperatures above a household's preferred temperature, primarily for customers who are typically home during the day. Customers infrequently override the feature when they experience discomfort, suggesting that they are willing to trade off monetary savings for small increases in discomfort. Automation thus enables low-cost changes in household energy use, with potentially large electricity supply-cost reductions at scale.Citation
Blonz, Joshua, Karen Palmer, Casey J. Wichman, and Derek C. Wietelman. 2025. "Smart Thermostats, Automation, and Time-Varying Prices." American Economic Journal: Applied Economics, 17 (1): 90–125. DOI: 10.1257/app.20210618Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- L94 Electric Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy
- Q48 Energy: Government Policy
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