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Better energy cost information changes household property investment decisions: Evidence from a nationwide experiment

James Carroll (), Eleanor Denny () and Ronan Lyons ()
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James Carroll: Department of Economics, Trinity College Dublin
Eleanor Denny: Department of Economics, Trinity College Dublin

Economic Papers from Trinity College Dublin, Economics Department

Abstract: With buildings accounting for roughly 40% of energy consumption in the US and Europe, energy efficiency upgrades will be central in meeting climate targets. Based on the hypothesis that there is imperfect information regarding the cost-saving implications of efficiency improvements, we add property-specific energy cost labels to sales advertisements in a randomized controlled trial covering the entire Irish housing market. This is the first energy framing field trial for property, the household’s largest energy consuming investment and the household technology which likely has the highest variation in energy consumption due to heterogeneity in efficiency and size. Our analysis of over 31,000 transacted properties finds strong evidence that energy cost forecasts change homebuyer behaviour, with the energy efficiency premium increasing by 0.7 percentage points in treatment counties. We also find that more energy efficient properties sell faster and, for the first time, show that treatment further shortened this time-to-sell. While a major departure from existing property labelling policy, these results suggest that framing property energy efficiency according to cost implications rather than kilowatt-hours increases the demand for energy efficiency.

Keywords: Energy Labels; Energy Efficiency Premium; Energy Performance Certificate; Randomized Controlled Trial (search for similar items in EconPapers)
JEL-codes: C93 D12 Q40 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-08
New Economics Papers: this item is included in nep-ene, nep-exp and nep-ure
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