The report from think tank Policy Exchange said there is evidence that households cut the amount of energy they use when they compare themselves against a more energy efficient neighbour.
A trial in Camden, north London, found that residents cut their gas and electricity bills by 6pc by comparing their energy use to neighbours in similar properties.
The trial, which looked at 600 homes, cost less than ?3 per household.
The think tank said the Government's new energy efficiency subsidy, the Energy Company Obligation, should be used to pay for the scheme, as well as similar 'nudging' initiatives that focus on reducing energy use.
The report argues that the introduction of smart meters, which will see 53 million new gas and electricity meters installed in homes across the UK over the next seven years, offers a good opportunity to test similar behavioural programmes.
Initiatives which encourage people to use less energy in their homes are also potentially more cost-effective than technical measures such as insulation.
Guy Newey, the report's author, said: ?Helping people to cut their rising energy bills and avoid wasting energy is one of the most important things the Government can do.
"It is also one of the easiest and cheapest ways of reducing our carbon emissions."
He said: "Smart meters have the potential to help change the way we use energy in the homes. But they won?t change habits on their own.
"Households need support to understand where they can make savings. If your find out your neighbour is paying ?50 a month less for their energy, you?re much more likely to do something about reducing your own energy use.?
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