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Understanding the Solar Home price premium: Electricity generation and “Green” social status

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Author Info

  • Dastrup, Samuel R.
  • Graff Zivin, Joshua
  • Costa, Dora L.
  • Kahn, Matthew E.

Abstract

This study uses a large sample of homes in the San Diego area and Sacramento, California area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels. Although the residential solar home market continues to grow, there is little direct evidence on the market capitalization effect. Using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3.5% premium. This premium is larger in communities with a greater share of college graduates and of registered Prius hybrid vehicles.

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File URL: http://www.sciencedirect.com/science/article/pii/S0014292112000244
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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 56 (2012)
Issue (Month): 5 ()
Pages: 961-973

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Handle: RePEc:eee:eecrev:v:56:y:2012:i:5:p:961-973

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Solar panels; Real estate prices; Environmentalism;

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References

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  1. Eichholtz, Piet & Kok, Nils & Quigley, John M., 2009. "Doing Well by Doing Good? Green Office Buildings," Berkeley Program on Housing and Urban Policy, Working Paper Series qt507394s4, Berkeley Program on Housing and Urban Policy.
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  3. Kahn, Matthew E., 2007. "Do greens drive Hummers or hybrids? Environmental ideology as a determinant of consumer choice," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 129-145, September.
  4. Bryan Bollinger & Kenneth Gillingham, 2012. "Peer Effects in the Diffusion of Solar Photovoltaic Panels," Marketing Science, INFORMS, vol. 31(6), pages 900-912, November.
  5. Becker, Gary S, 1991. "A Note on Restaurant Pricing and Other Examples of Social Influences on Price," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1109-16, October.
  6. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
  7. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  8. Matthew J. Kotchen, 2003. "Green Markets and Private Provision of Public Goods," Department of Economics Working Papers 2003-05, Department of Economics, Williams College.
  9. Heutel, Garth & Muehlegger, Erich, 2010. "Consumer Learning and Hybrid Vehicle Adoption," Working Paper Series rwp10-013, Harvard University, John F. Kennedy School of Government.
  10. Matthew Kotchen & Michael Moore, 2008. "Conservation: From Voluntary Restraint to a Voluntary Price Premium," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(2), pages 195-215, June.
  11. Michael I. Cragg & Yuyu Zhou & Kevin Gurney & Matthew E. Kahn, 2013. "Carbon Geography: The Political Economy Of Congressional Support For Legislation Intended To Mitigate Greenhouse Gas Production," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1640-1650, 04.
  12. Harding, John P. & Rosenthal, Stuart S. & Sirmans, C.F., 2007. "Depreciation of housing capital, maintenance, and house price inflation: Estimates from a repeat sales model," Journal of Urban Economics, Elsevier, vol. 61(2), pages 193-217, March.
  13. Dora L. Costa & Matthew E. Kahn, 2010. "Why Has California’s Residential Electricity Consumption Been So Flat since the 1980s?: A Microeconometric Approach," NBER Working Papers 15978, National Bureau of Economic Research, Inc.
  14. Brounen, Dirk & Kok, Nils, 2011. "On the economics of energy labels in the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 166-179, September.
  15. Kahn Matthew E & Vaughn Ryan K., 2009. "Green Market Geography: The Spatial Clustering of Hybrid Vehicles and LEED Registered Buildings," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(2), pages 1-24, March.
  16. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
  17. Sherwin Rosen, 2002. "Markets and Diversity," American Economic Review, American Economic Association, vol. 92(1), pages 1-15, March.
  18. Wilhelmsson, Mats, 2008. "House price depreciation rates and level of maintenance," Journal of Housing Economics, Elsevier, vol. 17(1), pages 88-101, March.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Do Residential Solar Power Subsidies Mainly Benefit the 1%?
    by Matthew E. Kahn in The Reality-Based Community on 2013-07-27 16:24:24
  2. The Economics of Green Identity or How to Get Newt and Al Gore to Hold Hands and Jointly Support Reducing GHG Emissions
    by Matthew E. Kahn in Environmental and Urban Economics on 2012-01-21 18:04:00
  3. Conservatives and Conservation
    by Matthew E. Kahn in Environmental and Urban Economics on 2012-06-11 15:48:00
  4. Solar homesteads
    by James Wimberley in The Reality-Based Community on 2012-07-26 18:11:23
  5. Some Economics of the Green Partisan Divide
    by Matthew E. Kahn in Legal Planet on 2012-09-03 15:55:52
  6. My New Paper on the Price Premium for Energy Star Certified Homes in California
    by Matthew E. Kahn in The Reality-Based Community on 2012-07-19 22:39:10
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Yamamura, Eiji, 2014. "Time preference and perceptions about government spending and tax: Smokers’ dependence on government support," MPRA Paper 55659, University Library of Munich, Germany.
  2. Li, Xuesong & Li, Hao & Wang, Xingwu, 2013. "Farmers' willingness to convert traditional houses to solar houses in rural areas: A survey of 465 households in Chongqing, China," Energy Policy, Elsevier, vol. 63(C), pages 882-886.
  3. Delmas, Magali A. & Lessem, Neil, 2014. "Saving power to conserve your reputation? The effectiveness of private versus public information," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 353-370.
  4. Walls, Margaret & Palmer, Karen & Gerarden, Todd, 2013. "Is Energy Efficiency Capitalized into Home Prices? Evidence from Three US Cities," Discussion Papers dp-13-18, Resources For the Future.

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