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What Matters for Electrification? Evidence from 70 Years of U.S. Home Heating Choices

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  • Lucas W. Davis

Abstract

The percentage of U.S. homes heated with electricity has increased steadily from 1% in 1950, to 8% in 1970, to 26% in 1990, to 40% in 2020. This paper investigates the key determinants of this increase in electrification using data on heating choices from millions of U.S. households over a 70-year period. Energy prices, geography, climate, housing characteristics, and household income are shown to collectively explain 90% of the increase, with changing energy prices by far the most important single factor. This framework is then used to calculate the economic cost of an electrification mandate for new homes. Households in warm states tend to prefer electricity anyway, so would be made worse off by less than $350 annually on average. Households in cold states, however, tend to strongly prefer natural gas so would be made worse off by more than $1000 annually. These findings are directly relevant to a growing number of policies aimed at reducing carbon dioxide emissions through electrification.

Suggested Citation

  • Lucas W. Davis, 2021. "What Matters for Electrification? Evidence from 70 Years of U.S. Home Heating Choices," NBER Working Papers 28324, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28324
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    Cited by:

    1. Borenstein, Severin & Bushnell, James, 2021. "Issues, Questions, and a Research Agenda for the Role of Pricing in Residential Electrification," RFF Working Paper Series 21-35, Resources for the Future.
    2. Fernando Martins & Pedro Moura & Aníbal T. de Almeida, 2022. "The Role of Electrification in the Decarbonization of the Energy Sector in Portugal," Energies, MDPI, vol. 15(5), pages 1-35, February.
    3. Singhal, Puja & Pahle, Michael & Kalkuhl, Matthias & Levesque, Antoine & Sommer, Stephan & Berneiser, Jessica, 2022. "Beyond good faith: Why evidence-based policy is necessary to decarbonize buildings cost-effectively in Germany," Energy Policy, Elsevier, vol. 169(C).
    4. Jens Ewald & Thomas Sterner & Eoin Ó Broin & Érika Mata, 2021. "Saving energy in residential buildings: the role of energy pricing," Climatic Change, Springer, vol. 167(1), pages 1-20, July.
    5. Hirth, Lion & Khanna, Tarun & Ruhnau, Oliver, 2022. "The (very) short-term price elasticity of German electricity demand," EconStor Preprints 249570, ZBW - Leibniz Information Centre for Economics.

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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