Energy Use By Apartment Tenants When Landlords Pay For Utilities
Energy costs are included in the monthly rent of one fourth of U.S. apartment residents. Because these tenants do not face the marginal cost of their own energy use, they have little incentive to use energy efficiently. Explanations for this apparent market failure fall into two categories: the tenants value such arrangements more than they value the extra energy, or the landlords value the arrangements more than the cost of the extra energy. We use data from the U.S. Department of Energy's Residential Energy Consumption Survey and the Census Bureau's American Housing Survey to estimate energy consumption by tenants in utility-included apartments, and the rent premium for those apartments. While market rents for utility-included apartments are higher than for otherwise similar metered apartments, the difference is smaller than the cost of the energy used, a finding that supports landlord-side explanations for the persistence of these seemingly inefficient rental contracts.
|Date of creation:||09 Jan 2001|
|Date of revision:|
|Contact details of provider:|| Postal: Georgetown University Department of Economics Washington, DC 20057-1036|
Web page: http://econ.georgetown.edu/
|Order Information:|| Postal: Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036|
Web: http://econ.georgetown.edu/ Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Dewees, Donald N & Wilson, Thomas A, 1990. "Cold Houses and Warm Climates Revisited: On Keeping Warm in Chicago, or Paradox Lost: Comment," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 656-63, June.
- Kevin A. Hassett & Gilbert E. Metcalf, 1997.
"Measuring the Energy Savings from Home Improvements Investments: Evidence from Monthly Billing Data,"
Discussion Papers Series, Department of Economics, Tufts University
9701, Department of Economics, Tufts University.
- Gilbert E. Metcalf & Kevin A. Hassett, 1999. "Measuring The Energy Savings From Home Improvement Investments: Evidence From Monthly Billing Data," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 516-528, August.
- Gilbert E. Metcalf & Kevin A. Hassett, 1997. "Measuring the Energy Savings from Home Improvement Investments: Evidence from Monthly Billing Data," NBER Working Papers 6074, National Bureau of Economic Research, Inc.
- James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
- Pagan, Adrian & Vella, Frank, 1989. "Diagnostic Tests for Models Based on Individual Data: A Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S29-59, Supplemen.
- Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, vol. 16(2), pages 91-122, May.
- 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 1089-97, October.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
When requesting a correction, please mention this item's handle: RePEc:geo:guwopa:gueconwpa~01-01-09. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marcia Suss)
If references are entirely missing, you can add them using this form.