ENERGY USE AND TEMPERATURE HABITUATION: EVIDENCE FROM HIGH FREQUENCY THERMOSTAT USAGE DATA

Qi Ge and Benjamin Ho

Economic Inquiry, 2019, vol. 57, issue 2, 1196-1214

Abstract: Using micro‐level thermostat data from 27,000 U.S. households, we analyze how home heating/cooling decisions respond to weather. Responses are greater for extreme heat than for extreme cold and persist for at least 30 days after exposure, due in part to transaction costs but also to changes in intrinsic preferences. Failure to understand habit can lead us to overestimate the impact of short‐term policy nudges but underestimate the long‐run impact of small changes. Higher frequency estimates of how behavior responds to weather improve our understanding of climate adaptation as climate change affects not only mean temperatures but also variances. (JEL C55, D03, Q4)

Date: 2019
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