Designing policy to influence consumers
Briefing note 3: consumer behaviour and electronics

When designing policy to influence consumers, you must take into account the way in which people make choices. Consumer choice is strongly influenced by mental short-cuts and emotive factors – it is not just a rational assessment of information on quality and price. Often these short-cuts lead to biases, which mean consumers do not always buy the best product for them. Effective policy must work with these mental short-cuts and account for the many factors that influence consumer choice.

When designing policies aimed at influencing the purchase and use of consumer electronics, remember that consumers…
• … are strongly influenced by unusual prices and offers. The visibility of these prices is very important: a key factor in consumer choice is whether an individual believes they are getting some kind of reduction in price. If they believe this, they are more likely to buy it as they see themselves as making a ‘profit’ on the purchase. Something ‘half price’ or in particular ‘free’ (for example ‘tax free’) can be even more appealing. Work with retailers, for example through voluntary agreements and codes of conduct, to promote energy efficient products. • … are very averse to loss. People want to avoid loss even more than they value additional gains, so use policy that imposes visible losses – like extra tax - even if quite small relative to the price. This is more influential than a similar-sized positive incentive, so can be used to make policy more effective at a small policy cost. The same is true for describing relative qualities. For example, labelling that highlights the additional running costs of less efficient product (compared to the most-efficient product) will have a bigger impact than labels that highlight the savings potential of a more efficient