The market needs help: The disappointing record of home energy conservation

Energy conservation is widely considered to be the most promising solution to the nation's energy problems. The dominant public policy in this field has been to encourage conservation by decontrolling energy prices and relying on consumers to respond to price increases in ways that best meet their individual needs. This policy so far has led to only small reductions in energy use within the home, and even these reductions are only partly attributable to conservation behavior. Among the many obstacles to residential conservation that have come to light, a major one is the difficulty of predicting what savings will result from any specific investment in home energy efficiency. Ten years of experience after the 1973 oil crisis raises doubts about the feasibility of residential conservation as a short‐term energy strategy, and suggests that new policies are needed to improve the operation of the market for conservation investment.