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Cold Houses in Warm Climates and Vice Versa: A Paradox of Rational Heating

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  • Friedman, David

Abstract

Houses in cold climates are kept warmer in winter than those in warm climates, des pite the greater cost of heating in colder climates. It is shown that this is not only consistent with, but also implied by, rationality. The contrary intuition is based on a confusion between average and ma rginal cost. The same analysis implies that it is rational to keep th e thermostat setting constant throughout the heating season rather th an changing it with changes in external temperature. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Friedman, David, 1987. "Cold Houses in Warm Climates and Vice Versa: A Paradox of Rational Heating," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 1089-1097, October.
  • Handle: RePEc:ucp:jpolec:v:95:y:1987:i:5:p:1089-97
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Not ready for the rain, in northern Chile
      by Tyler Cowen in Marginal Revolution on 2011-08-08 01:47:11

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    Cited by:

    1. Choi, Seok Joon & Kim, Sangsin, 2012. "Why Do Landlords Include Utilities in Rent? Evidence from the 2000 Housing Discrimination Study (HDS) and the 2002 American Housing Survey (AHS)," Journal of Housing Economics, Elsevier, vol. 21(1), pages 28-40.
    2. Levinson, Arik & Niemann, Scott, 2004. "Energy use by apartment tenants when landlords pay for utilities," Resource and Energy Economics, Elsevier, vol. 26(1), pages 51-75, March.
    3. Simon Cowan, 2007. "The welfare effects of third-degree price discrimination with nonlinear demand functions," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 419-428, June.
    4. Ana Ramos & Xavier Labandeira & Andreas Löschel, 2016. "Pro-environmental Households and Energy Efficiency in Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 367-393, February.
    5. Thompson, Philip B, 1997. "Evaluating energy efficiency investments: accounting for risk in the discounting process," Energy Policy, Elsevier, vol. 25(12), pages 989-996, October.
    6. Simon GB Cowan & Simon Cowan, 2004. "Demand shifts and imperfect competition," Economics Series Working Papers 188, University of Oxford, Department of Economics.
    7. Tyler Cowen, 2005. "Self-deception as the root of political failure," Public Choice, Springer, vol. 124(3), pages 437-451, September.
    8. Barro, Robert J, 1989. "An Efficiency-Wage Theory of the Weather," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 999-1001, August.
    9. Walter Y. Oi, 1996. "The Welfare Implications of Invention," NBER Chapters,in: The Economics of New Goods, pages 109-142 National Bureau of Economic Research, Inc.
    10. Philip B. Thompson, 2002. "Consumer Theory, Home Production, And Energy Efficiency," Contemporary Economic Policy, Western Economic Association International, vol. 20(1), pages 50-59, January.
    11. Xavier Labandeira & Ana Ramos, 2012. "Household Environmental Attitudes and Energy Efficiency in Buildings: Evidence from Spanish Data," Working Papers fa08-2012, Economics for Energy.
    12. Schuler, Andreas & Weber, Christoph & Fahl, Ulrich, 2000. "Energy consumption for space heating of West-German households: empirical evidence, scenario projections and policy implications," Energy Policy, Elsevier, vol. 28(12), pages 877-894, October.
    13. Ana Ramos & Xavier Labandeira & Andreas Lšschel, 2015. "Pro-Environmental Households and Energy Efficiency in Spain," Working Papers 01-2015, Economics for Energy.
    14. Cowan, Simon, 2004. "Optimal risk allocation for regulated monopolies and consumers," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 285-303, January.
    15. Meredith Fowlie & Michael Greenstone & Catherine Wolfram, 2015. "Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program," NBER Working Papers 21331, National Bureau of Economic Research, Inc.
    16. Kaiser, Mark J. & Pulsipher, Allan G., 2010. "Preliminary assessment of the Louisiana Home Energy Rebate Offer program using IPMVP guidelines," Applied Energy, Elsevier, vol. 87(2), pages 691-702, February.

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