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Residential Building Codes Do Save Energy: Evidence from Hourly Smart-Meter Data

Author

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  • Kevin Novan
  • Aaron Smith
  • Tianxia Zhou

Abstract

In 1978, California adopted building codes designed to reduce the energy used for temperature control. Using a rich data set of hourly electricity consumption for 158,112 houses in Sacramento, we estimate that the average house built just after 1978 uses 8% to 13% less electricity for cooling than a similar house built just before 1978. Comparing the estimated savings to the policy's projected cost, our results suggest the policy passes a cost-benefit test. In settings where market failures prevent energy costs from being completely passed through to home prices, building codes can serve as a cost- effective tool for improving energy efficiency.

Suggested Citation

  • Kevin Novan & Aaron Smith & Tianxia Zhou, 2022. "Residential Building Codes Do Save Energy: Evidence from Hourly Smart-Meter Data," The Review of Economics and Statistics, MIT Press, vol. 104(3), pages 483-500, May.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:3:p:483-500
    DOI: 10.1162/rest_a_00967
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    Citations

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    Cited by:

    1. Ekaterina Alekhanova, 2023. "Summertime Sadness: Time Sensitivity of Electricity Savings from a Behavioral Nudge," Carleton Economic Papers 23-01, Carleton University, Department of Economics, revised 11 Nov 2023.
    2. Hadush Meles, Tensay & Farrell, Niall & Curtis, John, 2023. "Are energy performance certificates a strong predictor of actual energy use? Evidence from high-frequency thermostat panel data," Papers WP749, Economic and Social Research Institute (ESRI).
    3. Desmond Adjaison & Antwi-Boasiako Amoah, 2026. "Assessing Accra’s Climate Action Plan as a case of vertical integration to achieve sustainable development," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(4), pages 8943-8966, April.
    4. Fu, Zheng & Novan, Kevin & Smith, Aaron, 2024. "Do time-of-use prices deliver energy savings at the right time?," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    5. Wang, Yishi & Jin, Andrew S. & Sanders, Kelly T., 2026. "A systematic review of literature utilizing residential smart meter data," Renewable and Sustainable Energy Reviews, Elsevier, vol. 225(C).
    6. Stefano Carattini & Wade Davis & Béla Figge & Anton Heimerdinger, 2025. "Solar Adoption by Mandates," CESifo Working Paper Series 12359, CESifo.
    7. Cui, Xiaomeng & Gafarov, Bulat & Ghanem, Dalia & Kuffner, Todd, 2024. "On model selection criteria for climate change impact studies," Journal of Econometrics, Elsevier, vol. 239(1).
    8. Ulph, Alistair & Panzone, Luca & Hilton, Denis, 2023. "Do rational people sometimes act irrationally? A dynamic self-regulation model of sustainable consumer behavior," Economic Modelling, Elsevier, vol. 126(C).
    9. Omar Isaac Asensio & Olga Churkina & Becky D. Rafter & Kira E. O’Hare, 2024. "Housing policies and energy efficiency spillovers in low and moderate income communities," Nature Sustainability, Nature, vol. 7(5), pages 590-601, May.
    10. Matthew J. Holian, 2023. "Methods in open policy analysis: An application to California's building energy codes," Contemporary Economic Policy, Western Economic Association International, vol. 41(4), pages 613-628, October.
    11. Mehdi Nemati, 2026. "How Effective Are Building Codes at Reducing Residential Water Use? Evidence From California Billing Data," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 45(2), March.
    12. Aydin, Erdal, 2024. "Heterogeneous impacts of building codes on residential energy demand," Energy Economics, Elsevier, vol. 131(C).
    13. Est vez, Andr s & Tovar Rea os , Miguel, 2024. "Empowering homes? Unravelling the connection between energy efficiency and well-being," Papers WP784, Economic and Social Research Institute (ESRI).
    14. Ekaterina Alekhanova & Maya Papineau & Kareman Yassin, 2023. "Realized Savings from Canada's Building Energy Codes," Carleton Economic Papers 23-06, Carleton University, Department of Economics.
    15. Jacobsen, Grant D., 2025. "Who adopts and deploys advanced home energy technologies?," Energy Economics, Elsevier, vol. 145(C).

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