Thursday, February 28, 2008

Pricing Awareness

There is much talk about how elastic the price of fuel is.  No matter how much the price of petrol goes up, it doesn't seem to effect our driving habits. I think the reason is the we only make the connection at the point of sale.  When we buy things in the shop, we have the item in hand while we make the payment, so there is a clear connection.  We wince at the pain of paying for the tank of petrol but after that driving is apparently free, we just have to buy some more petrol, sometime in the future. Salesman know about this.  Buy a car free today, nothing to pay for 12 months.  

I noticed the impact of knowing how much I was spending in realtime when I put in an electric meter in the house.  Like the petrol situation, an electricity bill is something that has to be paid, but it has an even more tenuous connection with my use of electricity because I'm not even sure how much each of my appliances is using.  Put that instant readout on and suddenly I'm much more interested in why it says 6c/hour when everything is apparently switched off, or 65c a minute when I turn the kettle on.  

So the solution to getting to reduce unnecessary car use?  Filling  up your car is free, but the oil company charge you for each mile you drive, as you drive, and a meter in the car shows the cost of your journey.  That would certainly effect my driving - slow me down as well!

See TED talk that sparked this thought:

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