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Looking for Free-riding: Energy Efficiency Incentives and Italian Homeowners


  • Anna Alberini

    (Department of Agricultural and Resource Economics, University of Maryland, USA, Fondazione Eni Enrico Mattei, Italy and faculty affiliate at CEPE, ETH Zurich)

  • Andrea Bigano

    (Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre for Climate Change, Italy)

  • Marco Boeri

    (Queen’s University, Northern Ireland)


We examine the effect of energy efficiency incentives on household energy-efficiency home improvements. Starting in February 2007, Italian homeowners have been able to avail themselves of tax credits on the purchase and installation costs of certain types of energy efficiency renovations. We examine two such renovations—door/windows replacements and heating system replacements—using multi-year cross-section data from the Italian Consumer Expenditure Survey and focusing on a narrow period around the introduction of the tax credits. Our regressions control for dwelling and household characteristics and economy-wide factors likely to influence the replacement rates. The effects of the policy are different for the two types of renovations. With window replacements, the policy is generally associated with a 30% or stronger increase in the renovation rates and number of renovations. In the simplest econometric models, the effect is not statistically significant, but the results get stronger when we allow for heterogeneous effects across the country. With heating system replacements, simpler models suggest that the tax credits policy had no effect whatsoever or that free riding was rampant, i.e., people are now accepting subsidies for replacements that they would have done anyway. Further examination suggests a strong degree of heterogeneity in the effects across warmer and colder parts of the country, and effects in the colder areas that are even more pronounced than those for windows replacements. These results should, however, be interpreted with caution due to the low rate of renovations and the imprecisely estimated effects.

Suggested Citation

  • Anna Alberini & Andrea Bigano & Marco Boeri, 2013. "Looking for Free-riding: Energy Efficiency Incentives and Italian Homeowners," Working Papers 2013.24, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2013.24

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    References listed on IDEAS

    1. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 41-74.
    2. Hassett, Kevin A. & Metcalf, Gilbert E., 1995. "Energy tax credits and residential conservation investment: Evidence from panel data," Journal of Public Economics, Elsevier, vol. 57(2), pages 201-217, June.
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    Cited by:

    1. Olsthoorn, Mark & Schleich, Joachim & Gassmann, Xavier & Faure, Corinne, 2017. "Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment," Working Papers "Sustainability and Innovation" S10/2017, Fraunhofer Institute for Systems and Innovation Research (ISI).
    2. Michelsen, Carl Christian & Madlener, Reinhard, 2015. "Beyond Technology Adoption: Homeowner Satisfaction with Newly Adopted Residential Heating Systems," FCN Working Papers 1/2015, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    3. Anna Alberini & Milan Šcasný & Andrea Bigano, 2016. "Policy- v. Individual Heterogeneity in the Benefits of Climate Change Mitigation: Evidence from a Stated-Preference Survey," Working Papers 2016.80, Fondazione Eni Enrico Mattei.
    4. Collins, Matthew & Curtis, John, 2016. "Willingness-to-Pay and Free-Riding in a National Energy Efficiency Retrofit Grant Scheme: A Revealed Preference Approach," Papers WP551, Economic and Social Research Institute (ESRI).
    5. Alberini, Anna & Bigano, Andrea, 2015. "How effective are energy-efficiency incentive programs? Evidence from Italian homeowners," Energy Economics, Elsevier, vol. 52(S1), pages 76-85.
    6. Jean-Sébastien Broc & Catherine Guermont & Christian Deconninck & Marie-Laure Nauleau, 2017. "Impacts and cost-effectiveness of major energy efficiency policies for existing buildings: what do we exactly know and what can we learn?," Post-Print hal-01577516, HAL.

    More about this item


    Energy Efficiency Policy; Household Behavior; Italy; Energy Consumption Survey;

    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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