Blind Spots in Policy Analysis: What Economics Doesn't Say about Energy Use

The article describes the difficulties of reducing analysis of energy use to an application of economic theory. It shows how economic concepts of behavior direct attention selectively to some important determinants of consumer behavior and away from others; how available economic accounts of short-term change in energy use, investment in energy efficiency, and the dynamics of investment limit understanding and narrow analysis' vision; how promising policy options are overlooked as a result; and how concepts of knowledge from the noneconomic behavioural sciences can compensate. Two strategies are discussed for improving analysis. Using economic theory to guide the improvement of existing models can help, but conceptual blind spots will remain. A problem-oriented approach drawing on concepts and methods from across the behavioral sciences can avoid the blind spots, but cannot be systematic. Analysis can be improved by using both approaches in concert; some implications of a combined strategy are sketched.