Measuring The Energy Savings From Home Improvement Investments: Evidence From Monthly Billing Data

Gilbert Metcalf and Kevin Hassett

The Review of Economics and Statistics, 1999, vol. 81, issue 3, 516-528

Abstract: An important factor driving energy policy over the past two decades has been the ''energy paradox,'' the perception that consumers apply unreasonably high hurdle rates to energy-saving investments. We explore one possible explanation for this apparent puzzle: that realized returns fall short of the returns promised by engineers and product manufacturers. Using a unique data set, we find that the realized return to attic insulation is statistically significant, but the median estimate (9.7%) is almost identical to a discount rate for this investment implied by a CAPM analysis. We conclude that the case for the energy paradox is weaker than has previously been believed. © 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 1999
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Working Paper: Measuring the Energy Savings from Home Improvement Investments: Evidence from Monthly Billing Data (1997)
Working Paper: Measuring the Energy Savings from Home Improvements Investments: Evidence from Monthly Billing Data (1997)
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