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Split Incentives in Emerging Countries

Author

Listed:
  • Hector H. Sandoval

    (BEBR/University of Florida)

  • Pedro I. Hancevic

    (CIDE/Universidad Panamericana)

Abstract

In this paper we provide empirical evidence of the energy-efficiency gap between home-owners and renters and quantify the magnitude of the split incentives problem in an emerging economy by studying Mexican households. Using micro-level data from the first National Survey on Energy Consumption in Private Homes (ENCEVI-2018) and a regression framework, we show that underinvestment problems occur in multiple categories of residential energy efficiency. Concretely, our results show that renters have significantly less insulation and energy-efficient equipment, that they tend to use some of their equipment more frequently, and that they pay higher utility bills than homeowners. In addition, renters are less aware of government programs that can reduce their energy expenditure and are also less likely to take advantage of them. Finally, a substantial reduction in carbon emissions could be achieved if renters were equally energy efficient as homeowners.

Suggested Citation

  • Hector H. Sandoval & Pedro I. Hancevic, 2023. "Split Incentives in Emerging Countries," Working Papers 242, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:242
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/242.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Split incentives; principal-agent problem; energy efficiency; Mexico;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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