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Information v. Energy Efficiency Incentives: Evidence from Residential Electricity Consumption in Maryland

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  • Alberini, Anna
  • Towe, Charles

Abstract

We focus on two utility programs intended to reduce energy usage and the associated CO2 emissions—a home energy audit and rebates on the purchase of high-efficiency air-source heat pumps. We use a unique panel dataset from participating and non-participating households to estimate the average treatment effect of participating in either program on electricity usage. We fit models with household-by-season, season-by-year, and household-by-year fixed effects to account for all possible confounders that might be influence energy usage. Since the programs are voluntary, we seek to restore near-exogeneity of the program “treatment” by matching participating households with control households. We deploy coarsened exact matching (CEM; Iacus et al., 2011) as our main matching method. We ask whether it is sufficient to match households based on past electricity usage, or if we gain by adding structural characteristics of the home, including heating system type. We find that the two programs reduce electricity usage by 5% on average. The effects are strong in both winter and summer for the energy audit group but appear to be stronger in the winter for the heat pump rebate group. Adding house characteristics to the matching variables does seem to affect results, suggesting that using past usage alone may not be sufficient to identify the effects of program participation.

Suggested Citation

  • Alberini, Anna & Towe, Charles, 2015. "Information v. Energy Efficiency Incentives: Evidence from Residential Electricity Consumption in Maryland," Energy: Resources and Markets 199112, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemer:199112
    DOI: 10.22004/ag.econ.199112
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    Cited by:

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    4. Weigert, Andreas & Hopf, Konstantin & Günther, Sebastian A. & Staake, Thorsten, 2022. "Heat pump inspections result in large energy savings when a pre-selection of households is performed: A promising use case of smart meter data," Energy Policy, Elsevier, vol. 169(C).
    5. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Working Papers 2018.07, FAERE - French Association of Environmental and Resource Economists.
    6. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    7. Ensieh Shojaeddini, 2020. "Heterogeneity in the Rebound Effect: Evidence from Efficient Lighting Subsidies," Working Papers 2020-07, Colorado School of Mines, Division of Economics and Business.
    8. Petrov, Ivan & Ryan, Lisa, 2021. "The landlord-tenant problem and energy efficiency in the residential rental market," Energy Policy, Elsevier, vol. 157(C).
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    10. Ke Fan & Edwin H. W. Chan & C. K. Chau, 2018. "Costs and Benefits of Implementing Green Building Economic Incentives: Case Study of a Gross Floor Area Concession Scheme in Hong Kong," Sustainability, MDPI, vol. 10(8), pages 1-19, August.
    11. Dong, Xiao & Klaiber, H. Allen, 2019. "Consumer stockpiling in response to the U.S. EISA “light bulb ban”," Energy Economics, Elsevier, vol. 81(C), pages 566-576.
    12. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    13. Fontecha, John E. & Nikolaev, Alexander & Walteros, Jose L. & Zhu, Zhenduo, 2022. "Scientists wanted? A literature review on incentive programs that promote pro-environmental consumer behavior: Energy, waste, and water," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    14. Anna Alberini & Massimo Filippini, 2015. "Transient and Persistent Energy Efficiency in the US Residential Sector: Evidence from Household-level Data," CER-ETH Economics working paper series 15/220, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    15. Schleich, Joachim & Fleiter, Tobias, 2019. "Effectiveness of energy audits in small business organizations," Resource and Energy Economics, Elsevier, vol. 56(C), pages 59-70.
    16. Chai, Andreas & Ratnasiri, Shyama & Wagner, Liam, 2021. "The impact of rising energy prices on energy poverty in Queensland: A microsimulation exercise," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 57-72.
    17. Liddle, Brantley & Loi, Tian Sheng Allan & Owen, Anthony D. & Tao, Jacqueline, 2020. "Evaluating consumption and cost savings from new air-conditioner purchases: The case of Singapore," Energy Policy, Elsevier, vol. 145(C).
    18. Rinne, Sonja, 2018. "Radioinactive: Are nuclear power plant outages in France contagious to the German electricity price?," CIW Discussion Papers 3/2018, University of Münster, Center for Interdisciplinary Economics (CIW).
    19. McAndrew, Ryan & Mulcahy, Rory & Gordon, Ross & Russell-Bennett, Rebekah, 2021. "Household energy efficiency interventions: A systematic literature review," Energy Policy, Elsevier, vol. 150(C).
    20. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    21. Miller, Mark & Alberini, Anna, 2016. "Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data," Energy Policy, Elsevier, vol. 97(C), pages 235-249.
    22. Spandagos, Constantine & Baark, Erik & Ng, Tze Ling & Yarime, Masaru, 2021. "Social influence and economic intervention policies to save energy at home: Critical questions for the new decade and evidence from air-condition use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    23. Broberg, Thomas & Egüez, Alejandro & Kažukauskas, Andrius, 2019. "Effects of energy performance certificates on investment: A quasi-natural experiment approach," Energy Economics, Elsevier, vol. 84(C).
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    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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