Paying bills is so mundane, it’s like breathing. And unless something goes seriously wrong, we don’t think about breathing, we just do it.
But when it comes to paying bills, you should stop to think; you could be paying more than you ought to be.
Normal people don’t pay much attention to the changes of the energy industry and the variety of tariffs available. Especially not once they’re set up with a provider.
In fact, even people looking for a new home often don’t check energy costs. In the UK, only 42% say they asked about the average price of energy bills, according to ING’s own research .
Yet energy providers often have a variety of prices and deals. To get the best one, you need to be on the lookout. And that’s tricky.
Why are people so averse to switching energy providers? There are five behavioural quirks behind it.
1. Familiarity bias – “I’ve always been with this provider”
If you’ve been with the same energy provider for years and they’ve never let you down, it’s easy to just stay with them.
We tend to stick with the things we know and trust, and unless they break that trust, why switch? Because you might save money with a different energy provider.
That’s why the first step to breaking this ‘familiarity bias’ is to check what other providers are offering.
2. Endowment effect – “I made a real effort, so it must be good”
We often overestimate the worth of something if we spent a lot of time on it, something known as the ‘endowment effect’.
Unfortunately, switching requires effort; potentially quite a lot of it. It can seem like a daunting task to search for a good deal.
If you spent a lot of time researching Company A, you may believe by the sheer amount of effort you put into it that it’s better than Company B, who you haven’t spent as much time looking at.
By exploring one company and what it offers, you may end up with a skewed view of how valuable that deal actually is.
3. Status quo bias - “It’s good enough, so why should I change?”
Let’s say you spent hours comparing energy providers several years ago and managed to find the best deal possible at the time. And you feel it has paid off, you haven’t experienced any issues at all.
It’s still likely that prices will have changed by now, or other providers will have come up with better deals.
While your deal might be comfortably predicable and issues-free, there still might be opportunity to find a better price elsewhere, even if there’s a small change involved.
4. Salience bias - “Switching wasn’t in my mind”
Energy providers and energy bills are not necessarily the first thing at the front of people’s minds. It’s just another bill to pay.
Unless there are clear signals in your everyday life, the idea of changing energy providers probably won’t rank high on your list of priorities.
This is where ‘salience bias’ - which means you pay more attention to things that are right in front of you - could help you out.
You could, for instance, give yourself a little nudge by setting up a yearly reminder in your calendar to look for a new energy provider.
Just as a nudge can help to switch energy providers, but there can be ‘sludge’ standing in your way too.
Sludge can be anything put up as an obstacle that makes switching energy providers more difficult, such as superfluous paperwork, or phone calls from your current provider asking if you’re really sure you want to leave them.
Fortunately, switching providers of any kind is the ‘new normal’ , whether it’s banks, mobile phone services or energy providers. Companies have been compelled to make it easier to do.
For many, though, our brains are still wired to expect a lot of extra work when it comes to switching providers, even if it might not be the case anymore.
Switch switch switch
While researching and comparing alternative energy providers can be a time-consuming and even daunting task, it will pay off financially in both the short and long term.
Offers within the energy market are continually changing, so it pays to keep on top what’s available and to actively change providers if there are better deals out there.
Small monthly saving will add up over time and make a big difference.
Jessica Exton is a behavioural scientist at ING