Nudges work: Simple pricing is key to switching

According to a recent study conducted by the British consumer association Which? and the energy company EDF Energy simple pricing enables consumers to find the cheapest deal for energy tariffs more quickly. It also increases their willingness to switch tariffs. Asking 2.500 participants researches found simple pricing to result in the following:

  • 91% of the consumers were able to spot the best deal, as compared to 43% for the case of a regular price structure.
  • The time required for a decision was reduced by 19 seconds.
  • With simple pricing 11% more consumers would opt to switch the tariff.

On these grounds Which? approached the Competition and Market Authority (CMA) to recommend and further simplify pricing among suppliers. Simplification can be considered as one of key nudges. 

EDF Energy Managing Director for Customers, Beatrice Bigois, commented on this matter: “The market for energy is highly competitive, but it will work better if every customer feels able to make a simple and well-informed choice. Energy companies will have to work together to make price comparison easier and more accurate but the need to find a better way for customers is clear.” 

Further information can be found here.

Source: Which?