Energy Efficiency, Home Improvements, and the Accumulation of Wealth

Martijn Dröes and Yasmine Van der Straten

ERES from European Real Estate Society (ERES)

Abstract: This paper shows that lower-income households are less likely to do energy efficiency enhancing home improvements. At the same time, higher-income households sort themselves into homes that are already more energy efficient to begin with. Over a 10-year horizon, the combined effect of energy savings accumulate to 12% of median net wealth, with ex ante sorting explaining 65% of this effect. If all households, regardless of income, had the same high energy-efficient home and the same rate of home improvement, the Gini coefficient on net wealth would be 1.7 percent lower over a 10-year period. These results show that households become green to varying degrees and that this has a fundamental impact on the accumulation and distribution of wealth.

Keywords: Energy Efficiency; home improvements; Wealth (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2024-145

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