Energy Labels, House Prices, and Efficiency Misreporting

Xinyu Lu and Christophe Spaenjers
Additional contact information
Xinyu Lu: HEC Paris
Christophe Spaenjers: University of Colorado Boulder - Leeds School of Business

No 1483, HEC Research Papers Series from HEC Paris

Abstract: We propose that home buyers and sellers rely on “heuristic hedonic models”: simplified representations of properties’ utility-bearing attributes. We test this hypothesis using public administrative data from France, where properties’ (continuous) estimated energy consumption is summarized by a (discrete) energy label on a scale from A to G. We document substantial misreporting-driven bunching of energy efficiency scores just below the relevant cut-off values, which points to labels’ perceived importance. Estimates of donut RDD models show that house prices drop sharply when energy consumption crosses the boundary to a lower rating. Moreover, we observe larger price discontinuities in areas where the relation between energy efficiency and house values is harder to estimate. Finally, the discontinuities also show up in home sellers’ list prices, suggesting that a simple buyer inattention story is insufficient to explain our findings.

Keywords: energy efficiency; energy labels; house prices; hedonic models; bunching. (search for similar items in EconPapers)
JEL-codes: D12 D83 Q58 R12 R28 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2023-04-17
New Economics Papers: this item is included in nep-dcm, nep-ene and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4408760 Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1483

DOI: 10.2139/ssrn.4408760

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().