Weather to pay attention to energy efficiency on the housing market

Ximeng Fang and Puja Singhal

Economics Letters, 2024, vol. 245, issue C

Abstract: Energy efficiency improvements can play an important role in reducing emissions from residential buildings, yet consumer decisions involving energy costs can be subject to bounded rationality due to, e.g., inattention and myopia. We present evidence that long-term, high-stakes decisions in the housing market are influenced by short-term contextual factors. Using data on housing transactions through a large online platform in Germany, we document that houses purchased following unusually cold weather tend to be more energy efficient, while the reverse is not true for unusually warm weather. This asymmetry suggests that the effect of temperature fluctuations on energy efficiency demand may be driven by salience of heating costs.

Keywords: Energy efficiency; Housing market; Context effects; Salience (search for similar items in EconPapers)
JEL-codes: D12 D91 R21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005251

DOI: 10.1016/j.econlet.2024.112041

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