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Weather to pay attention to energy efficiency on the housing market

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  • Fang, Ximeng
  • Singhal, Puja

Abstract

Energy efficiency improvements can play an important role in reducing emissions from residential buildings, yet consumer decisions involving energy costs can be subject to bounded rationality due to, e.g., inattention and myopia. We present evidence that long-term, high-stakes decisions in the housing market are influenced by short-term contextual factors. Using data on housing transactions through a large online platform in Germany, we document that houses purchased following unusually cold weather tend to be more energy efficient, while the reverse is not true for unusually warm weather. This asymmetry suggests that the effect of temperature fluctuations on energy efficiency demand may be driven by salience of heating costs.

Suggested Citation

  • Fang, Ximeng & Singhal, Puja, 2024. "Weather to pay attention to energy efficiency on the housing market," Economics Letters, Elsevier, vol. 245(C).
    • Handle: RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005251
    DOI: 10.1016/j.econlet.2024.112041
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    More about this item

    Keywords

    Energy efficiency; Housing market; Context effects; Salience;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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