fact that home improvement loans are taken out much more frequently for room additions or new siding than for reinsulation or new and improved furnaces. The former expenditures give owners pleasure or tangibly add to a home’s appearance, in addition to their economic benefits; the latter are unseen and mainly save money. Among energy investments, the usual preference for storm windows rather than wall insulation may reflect the same phenomenon: storm windows are attractive, cut down on street noise, and may decrease the physical effort of home upkeep; insulation offers a faster return on investment, but it lacks these consumer benefits.
This view of the energy user can be consistent with an assumption of rational action if people are assumed to act to maximize some subjective quality—what economists call a utility function. The usefulness of an assumption of rationality for predicting behavior would then depend on empirical knowledge of such utility functions and on a demonstration that they are based on reasonably stable preferences. Such evidence is lacking, so the view of the energy user as consumer is described here as a heuristic rather than a formal model.
Homes and automobiles also may have social meaning. They express membership in a community or attainment of a certain status in society. In youth, the keys to the family car symbolize attaining adult status; a home in the suburbs often symbolizes career success. And that home must be acceptable in appearance to the friends, neighbors, or co-workers—or the homeowner risks loss of status and rejection. As a local energy manager remarked to a member of the committee: “I’m committed to saving energy and I know plastic sheeting over my windows would have a fast payback, but I wouldn’t dream of putting plastic on my house. My neighbors would kill me.” Energy considerations almost always take second place when they are in conflict with strong social pressures.
Social group memberships are also important as sources of innovation and of energy information. A homeowner may get the idea to install a clock thermostat from seeing one in a friend’s or neighbor’s home; the decisive information about whether the investment is a good one may come from the experiences of that friend or neighbor. When this happens, the action is most accurately described by the metaphor of social contagion, even if the individual rationalizes his or her action in terms of expected financial return. Since such action is not the outcome of detailed search for information and may not produce the maximum expected benefit, it is not rational in the formal sense. It may not even approximate formal rationality—individuals may rely on sources that can add no accurate information whatever. Still, reliance on word-of-mouth information from