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Housing Energy Efficiency and the Horizon Effect

Author

Listed:
  • Ran Gu

    (University of Essex and Institute for Fiscal Studies)

  • EglÄ— JakuÄ ionytÄ—

    (Lietuvos Bankas (Bank of Lithuania) and Vilnius University)

  • Swapnil Singh

    (Lietuvos Bankas (Bank of Lithuania) and Kaunas University of Technology)

Abstract

This paper examines howthe investment horizon effect influences energy-efficiency investments, showing that older individuals have lower incentives to invest in energy efficiency. Using detailed microdata from England, we document that properties occupied by older households are systematically less energy efficient. We develop a two-period model where households make energyefficiency investment decisions under mortality risk, generating predictions about both individual and neighborhood-level investment patterns. Testing these predictions using historical instruments for neighborhood age structure, we find that a one-year increase in neighborhood mean age causes a 0.7 percentage point increase in energy inefficiency.

Suggested Citation

  • Ran Gu & EglÄ— JakuÄ ionytÄ— & Swapnil Singh, 2025. "Housing Energy Efficiency and the Horizon Effect," Bank of Lithuania Discussion Paper Series 43, Bank of Lithuania.
    • Handle: RePEc:lie:dpaper:43
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    More about this item

    Keywords

    household balance sheet; inflation; fiscal policy; interest rates; household consumption;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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