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Energy Labels, House Prices, and Efficiency Misreporting

Author

Listed:
  • Xinyu Lu

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Christophe Spaenjers

    (University of Colorado [Boulder])

Abstract

What are the implications of the use of discrete energy efficiency labels in the housing market? Using public administrative data from France, where properties are evaluated on a scale from A to G, we show that house prices drop — but time on the market jumps — discontinuously when energy consumption crosses the boundary to a lower rating. These results suggest that, when searching for a home, households form consideration sets excluding properties with energy labels that are considered too unfavorable. We also document substantial bunching of energy performance estimates just below the relevant cut-off values. This pattern appears to be driven by intentional misreporting of properties' energy efficiency by certified technicians. However, we estimate that the average under-reporting by marginal bunching technicians is relatively small in economic terms, namely 0.7–1.9% of the relevant energy consumption threshold value.

Suggested Citation

  • Xinyu Lu & Christophe Spaenjers, 2023. "Energy Labels, House Prices, and Efficiency Misreporting," Working Papers hal-04414133, HAL.
    • Handle: RePEc:hal:wpaper:hal-04414133
    DOI: 10.2139/ssrn.4408760
    as

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