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Behavioral Economics to Reduce Bottled Water Consumption

Student Voices

By Gregory Donworth and Vaidehi Uberoi

Master of Behavioral and Decision Sciences Candidates

University of Pennsylvania

October 22, 2020

Single-use plastic water bottles are a major source of pollution and energy consumption while also imposing a financial burden on consumers worldwide. In the United States (US) today, less than one out of every five bottles of water are properly recycled, while the remaining sum ends up discarded as litter or in landfills, where over 2 million tons of tossed away plastic bottles can be found.1

In addition, the often-overlooked negative impacts of plastic bottles can be found during the production and transportation of the water bottle supply chain. To meet the US demand for plastic water bottles, over 1.5 million barrels of oil are used in plastic production, and for every 1 liter of water packaged, over 3 liters of water are used in the production stage. The lifecycle impact of producing 1-kilogram of plastic water bottles includes 26.9 kilograms of water, 0.85 kilograms of fossil fuels, and 562 grams of greenhouse gas emissions.2

When looking at bottled water purchasing behavior, it is surprising that the majority of individuals who drink primarily bottled water in their homes are lower-income and minority households. In a 2019 survey in Philadelphia, 48% of women claim to drink primarily bottled water at home, compared to 31% of men; Hispanic and Black residents drink bottled water at home at rates of 59% and 58% respectively, while white households are much less likely, with only 21% drinking bottled water at home. Education and income are both negatively correlated, meaning that households with lower rates of education and/or lower monthly income are more likely to purchase bottled water for at-home consumption.3

Even as information about the negative aspects of bottled water become more commonly known, the consumption of bottled water has been steadily increasing over the past two decades. Consumers have stressed two main factors that contribute to their bottled water consumption habits; dissatisfaction with the taste of tap water and health concerns that tap water is unsafe to drink.3 However, several hidden biases including lack of trust in drinking water utilities, social perceptions of drinking branded bottled water, and perceived low cost of bottled water are also factors that contribute toward the heavy consumption of bottled water.4 To this end, principles from behavioral economics can be used to develop novel solutions to decrease unnecessary bottled water purchases.

 

Why Behavioral Economics

Behavioral economics is the field of study which blends psychology and economics and can help to provide insights into how and why individuals act in ways that are against their best interests. Traditional economics assumes that whenever a person has a decision to make, the decision-maker has all of the information available to them so they are able to make a rational choice. Behavioral economics, on the other hand, shows that humans may not actually make rational decisions but instead are subjected to numerous biases and self-control issues.5 The field of behavioral economics can help create a framework to reduce bottled water demand through the implementation of behavioral science interventions to improve trust in water quality, reduce the status symbol effect that branded water can have, and better frame the exorbitantly high costs of bottled water.

 

Lack of Trust

In 2018, 92% of US community water systems provided water that met all quality standards (up from 89% in 2005).6 Despite proven investigations and research, there is still a prevalent lack of trust in water quality, hence becoming a primary reason why consumers buy bottled water rather than drinking water from their tap.3

Individuals usually are enticed to purchase bottled water due to safety concerns about drinking tap water, yet they largely forget that many products purchased regularly are made from local tap water sources. Coffee, beer, water served at restaurants, and even bottled water itself largely come from tap water sources, so if consumers are already drinking tap water when purchasing these trusted products, why wouldn’t they trust the water in their home?

Individuals are influenced by the status quo bias where they prefer things to stay the same by doing nothing, or by continuing with a decision that was previously made even though it may negatively affect them.7 Local water utilities can benefit from the status quo bias by partnering with respected companies that utilize their municipal water to create consumer products and showcase to consumers that they are already drinking tap water through these common purchases, so why not continue to do so at home?

 

Status Symbol

Like most consumer packaged goods, bottled water has been heavily branded and marketed in recent decades, resulting in high-end, and even designer water bottle brands. Consumers are likely to consider the water bottle brand that they are carrying to be an addition to their status and the way in which people perceive them. In addition, when athletes, celebrities, and authority figures advertise for water bottle companies, their fans are more likely to purchase that specific brand of bottled water.

Getting key opinion leaders and revered personalities to endorse the use of tap water would elicit an authority bias making the message delivery more effective. Having these opinion leaders go to locations or mediums that residents already use (ex. Instagram, Facebook, Town Hall events) to publicize their support for not drinking bottled water, could cause authority bias which could lead to people lowering or stopping their consumption of plastic bottles.

 

Framing the High Cost

When shopping in convenience or grocery stores, bottled water has the benefit of being (typically) one of the lower-priced items available, which results in it becoming a commonly purchased item. The United States bottled water market in 2017 totaled a massive $17.5 billion in sales by providing an item that is close to free when coming out of consumers’ taps.8 Bottled water on average costs 300 times more than tap water, so even though the bottled water seems cheap when priced at $1, it is still magnitudes more expensive than its tap water equivalent.

Water utility companies can utilize loss aversion, which is the behavioral economics principle that shows that humans value what we have more than an equivalent gain. For example, losing $100 hurts more than the joy that finding $100 brings.9 In an attempt to have this technique affect bottled water purchases, water utilities could include a ‘Bottled Water Price Comparison’ on their customer utility bills, which could showcase how a $50 water utility bill would cost an astronomically high $15,000 when listed at bottled water prices.

 

Conclusion

Bottled water not only pollutes our environment but also costs us tens of billions of dollars annually, all while an almost free, safe, and environmentally friendly alternative is available inside of our homes. Due to bottled water purchases for in-home consumption primarily happening in lower-income, communities of color, transitioning these consumers from bottled water purchasers to tap water drinkers can help to reduce unnecessary expenses and create trust in local water utilities. As we have observed, a lot of the reasons people purchase bottled water are socio-behavioral, therefore behavioral economic principles could provide impactful and easy interventions to catalyze this positive shift in behavior.

 

Acknowledgment

This research has been conducted in advance of Gregory’s Master’s capstone project, ‘Redesigning Water Utility Bills to Promote Equity, Sustainability, and High Payment Rates’. Formative exploration was also conducted alongside Supriya Saxena, a recent graduate from the Master of Behavioral and Decision Sciences program at the University of Pennsylvania.

 

 

Gregory is an experienced problem solver, having built tools and systems spanning local food distribution, wind energy, and COVID-19 preparedness. He is currently a Master of Behavioral and Decision Sciences student at the University of Pennsylvania, where his focus is on using behavioral science to design more effective environmental programs. He is also currently employed as a Consumer Insights Manager at Aramark where he facilitates design thinking workshops to get at the root of an issue, develops quantitative market research studies to validate hypotheses, and builds measurement systems to track the impact of innovations. Prior to this, Gregory received his Bachelor of Science in Mechanical Engineering from Drexel University, where he was awarded a 40 under 40 alumni award in 2018 for the accomplishment of having his former local food logistics company acquired.

 

Vaidehi is interested in human behavior, design thinking, and data science to provide creative and pragmatic solutions to social, cultural, and individual issues. She is currently enrolled in the Masters in Behavioral and Decision Sciences program at the University of Pennsylvania. Vaidehi is also currently working as a part-time Behavior Science intern at Rare, at its Centre for Behavior and Environment, where she is learning how to accurately apply behavioral science skills and methodology to solve pressing environmental and conservation concerns. Prior to this, Vaidehi worked at Kantar India, as a consumer psychologist where she provided consumer insights to brands based on psychological analysis of individuals, culture, and businesses. Vaidehi received her Bachelors and Masters degrees in clinical psychology from Lady Shri Ram College, University of Delhi.

 

References

  1. 74 SHOCKING Plastic Water Bottle Pollution Facts & Statistics (2020). (2020, March 16). Retrieved October 22, 2020, from https://www.jerseyislandholidays.com/plastic-bottle-pollution-statistics/
  2. Bottle Water is Wasteful. (n.d.). Retrieved October 21, 2020, from https://thewaterproject.org/bottled-water/bottled_water_wasteful
  3. By the Bottle: Who is Drinking Bottled Water in Philly (and Why Does it Matter)? (2019, July 09). Retrieved October 21, 2020, from https://web.sas.upenn.edu/impact-ed/2019/07/09/by-the-bottle-who-is-drinking-bottled-water-in-philly-and-why-does-it-matter/
  4. Doria, M. F. (2006). Bottled water versus tap water: understanding consumers’ preferences. Journal of water and health, 4(2), 271-276.
  5. Heshmat, S. (2017, May 03). What Is Behavioral Economics? Retrieved October 21, 2020, from https://www.psychologytoday.com/us/blog/science-choice/201705/what-is-behavioral-economics
  6. Drinking Water Performance and Results Report. (2019, November 12). Retrieved October 21, 2020, from https://www.epa.gov/ground-water-and-drinking-water/drinking-water-performance-and-results-report
  7. Status quo bias. (2020, October 14). Retrieved October 21, 2020, from https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/status-quo-bias/
  8. Chavis, S. (2018, September 05). Water Is Free. Why Do Americans Spend Billions on the Bottled Stuff? Retrieved October 21, 2020, from https://recipes.howstuffworks.com/why-americans-spend-billions-bottled-water.htm
  9. Heshmat, S. (2018, March 08). What Is Loss Aversion? Retrieved October 21, 2020, from https://www.psychologytoday.com/us/blog/science-choice/201803/what-is-loss-aversion