What Matters for Electrification? Evidence from 70 Years of U.S. Home Heating Choices

Lucas Davis

No 28324, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The percentage of U.S. homes heated with electricity has increased steadily from 1% in 1950, to 8% in 1970, to 26% in 1990, to 40% in 2020. This paper investigates the key determinants of this increase in electrification using data on heating choices from millions of U.S. households over a 70-year period. Energy prices, geography, climate, housing characteristics, and household income are shown to collectively explain 90% of the increase, with changing energy prices by far the most important single factor. This framework is then used to calculate the economic cost of an electrification mandate for new homes. Households in warm states tend to prefer electricity anyway, so would be made worse off by less than $350 annually on average. Households in cold states, however, tend to strongly prefer natural gas so would be made worse off by more than $1000 annually. These findings are directly relevant to a growing number of policies aimed at reducing carbon dioxide emissions through electrification.

JEL-codes: H23 L51 Q41 Q42 Q48 Q54 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ene and nep-reg
Note: EEE
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Citations: View citations in EconPapers (6)

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