Additionality, Mistakes, and Energy Efficiency Investment

Ben Gilbert, Jacob LaRiviere () and Kevin Novan ()
Additional contact information
Jacob LaRiviere: Microsoft, University of Tennessee and University of Washington
Kevin Novan: Department of Agricultural and Resource Economics, University of California, Davis

No 2019-01, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: Investment subsidies, like those for energy efficiency upgrades, often suffer from poor additionality. Using a novel theoretical model, we show when benefits from investments are uncertain, subsidy policies can also lead to inefficient investment decisions that don't pass the full information benefit cost test. We use a unique household-level dataset of energy efficiency audits and investments to test model predictions. We find that households are significantly more likely to schedule audits and installs when first moving into an existing home when, ironically, information uncertainty is greatest. We then build on the theoretical model to inform better policy design.

Keywords: Durable Goods; Learning; Electricity; Second Best (search for similar items in EconPapers)
JEL-codes: D Q (search for similar items in EconPapers)
Pages: 58 pages
Date: 2019-06
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://econbus-papers.mines.edu/working-papers/wp201901.pdf First version, 2019 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mns:wpaper:wp201901

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