Opower cut energy use with neighbor comparisons and emoticons

Utilities trying to reduce residential energy use had two standard levers: raise the price (unpopular and often regulated) or fund rebates for efficient appliances (expensive, and it only reaches customers who were already going to act).

Founders Dan Yates and Alex Laskey built Opower around a narrower bet drawn from Robert Cialdini's social-norms research: pair the raw comparison (how a household's usage stacks up against ~100 similar nearby homes) with a small normative signal — a smiley or frowning face — so above-average users get a nudge to keep improving instead of relaxing once they learn they're already ahead.

Mailed reports comparing each household's usage to similar neighbors, with a smiley or frown to keep below-average users from relaxing instead of improving.

Most people care about peer comparison more than price or abstract appeals.

The emoticon signaled approval or disapproval, reinforcing the norm.

The comparison group was similar homes, making the signal credible.

The effect lasted months because the signal was repeated in reports.

To shift behavior you can't mandate or price, show people how they compare to a relevant peer group, and add a small normative signal to prevent backfire.

A 2009 NBER analysis of the two field experiments, covering roughly 75,000 households, found sustained reductions in energy consumption of 1.2% at Puget Sound Energy and 2.1% at Sacramento Municipal Utility District, with the effect holding for 7 to 12 months after the reports began — cutting energy use at a cost per kilowatt-hour saved that was competitive with, and often cheaper than, building new generation capacity.