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Why Has California's Residential Electricity Consumption Been So Flat since the 1980s?: A Microeconometric Approach

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  • Dora L. Costa
  • Matthew E. Kahn

Abstract

We use detailed microeconomic data to investigate why aggregate residential electricity consumption in California has been flat since 1980. Using unique micro data, we document the role that household demographics and ideology play in determining electricity demand. We show that building codes have been effective for homes built after 1983. We find that houses built in the 1970s and early 1980s were energy inefficient relative to houses built before 1960 because the price of electricity at the time of construction was low. Employing our regression estimates, we construct an aggregate residential electricity consumption time series index from 1980 to 2006. We show that certain micro determinants of household electricity consumption such as the phase in of building codes explain California's flat consumption while other factors (such as rising incomes and increased new home sizes) go in the opposite direction. Because homes are long-lived durables, we have not yet seen the full impact of building codes on California's electricity consumption.

Suggested Citation

  • Dora L. Costa & Matthew E. Kahn, 2010. "Why Has California's Residential Electricity Consumption Been So Flat since the 1980s?: A Microeconometric Approach," NBER Working Papers 15978, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15978
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    References listed on IDEAS

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    1. Mansur, Erin T. & Mendelsohn, Robert & Morrison, Wendy, 2008. "Climate change adaptation: A study of fuel choice and consumption in the US energy sector," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 175-193, March.
    2. Kahn, Matthew E., 2007. "Do greens drive Hummers or hybrids? Environmental ideology as a determinant of consumer choice," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 129-145, September.
    3. Anin Aroonruengsawat & Maximilian Auffhammer, 2011. "Impacts of Climate Change on Residential Electricity Consumption: Evidence from Billing Data," NBER Chapters,in: The Economics of Climate Change: Adaptations Past and Present, pages 311-342 National Bureau of Economic Research, Inc.
    4. Peter C. Reiss & Matthew W. White, 2008. "What changes energy consumption? Prices and public pressures," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 636-663.
    5. Kotchen, Matthew J. & Moore, Michael R., 2007. "Private provision of environmental public goods: Household participation in green-electricity programs," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 1-16, January.
    6. Kahn Matthew E & Vaughn Ryan K., 2009. "Green Market Geography: The Spatial Clustering of Hybrid Vehicles and LEED Registered Buildings," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(2), pages 1-24, March.
    7. Lucas W. Davis, 2008. "Durable goods and residential demand for energy and water: evidence from a field trial," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 530-546.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Big Think on the Future of Energy Economics
      by Matthew E. Kahn in Environmental and Urban Economics on 2012-02-17 23:59:00
    2. The Age of Big Data and the Rising Demand for Applied Micro Economists
      by Matthew E. Kahn in Environmental and Urban Economics on 2012-02-13 03:36:00
    3. Do Liberal Cities Block New Housing Development?
      by Matthew E. Kahn in Environmental and Urban Economics on 2010-11-25 07:53:00
    4. The Causes and Consequences of Environmentalism
      by Matthew E. Kahn in Environmental and Urban Economics on 2010-08-25 06:03:00
    5. Republicans and Environmentalism
      by Matthew E. Kahn in Environmental and Urban Economics on 2012-06-04 00:48:00
    6. Conservatives and Conservation
      by Matthew E. Kahn in Environmental and Urban Economics on 2012-06-11 20:48:00
    7. Do Environmentalists Own Swimming Pools?
      by Matthew Kahn in Environmental and Urban Economics on 2012-07-31 02:44:00
    8. Some Economics of the Green Partisan Divide
      by Matthew E. Kahn in Legal Planet on 2012-09-03 20:55:52
    9. 1043 Economics Journals to Choose From
      by Matthew Kahn in Environmental and Urban Economics on 2012-09-17 07:34:00
    10. New Real Estate Research by Kahn, Kok and Quigley
      by Matthew Kahn in Environmental and Urban Economics on 2013-01-13 00:24:00
    11. Energy Use in New Commercial Buildings: Rebound Effect?
      by Matthew Kahn in Urbanization Project on 2013-01-15 03:10:06
    12. California Energy Efficiency Exceptionalism?
      by Matthew Kahn in Environmental and Urban Economics on 2017-01-31 10:38:00

    Citations

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    Cited by:

    1. Matthew J. Kotchen, 2015. "Do Building Energy Codes Have a Lasting Effect on Energy Consumption? New Evidence From Residential Billing Data in Florida," NBER Working Papers 21398, National Bureau of Economic Research, Inc.
    2. Christian A. L. Hilber & Charles Palmer & Edward W. Pinchbeck, 2017. "The Energy Costs of Historic Preservation," SERC Discussion Papers 0217, Spatial Economics Research Centre, LSE.
    3. Dora L. Costa & Matthew E. Kahn, 2013. "Energy Conservation “Nudges” And Environmentalist Ideology: Evidence From A Randomized Residential Electricity Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 680-702, June.
    4. Dastrup, Samuel R. & Graff Zivin, Joshua & Costa, Dora L. & Kahn, Matthew E., 2012. "Understanding the Solar Home price premium: Electricity generation and “Green” social status," European Economic Review, Elsevier, vol. 56(5), pages 961-973.
    5. Alec Brandon & Paul J. Ferraro & John A. List & Robert D. Metcalfe & Michael K. Price & Florian Rundhammer, 2017. "Do The Effects of Social Nudges Persist? Theory and Evidence from 38 Natural Field Experiments," Experimental Economics Center Working Paper Series 2017-04, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    6. Arik Levinson, 2016. "How Much Energy Do Building Energy Codes Save? Evidence from California Houses," American Economic Review, American Economic Association, vol. 106(10), pages 2867-2894, October.
    7. Agarwal, Sumit & Satyanarain, Rengarajan & Sing, Tien Foo & Vollmer, Derek, 2016. "Effects of construction activities on residential electricity consumption: Evidence from Singapore's public housing estates," Energy Economics, Elsevier, vol. 55(C), pages 101-111.
    8. Ana Ramos & Xavier Labandeira & Andreas Löschel, 2016. "Pro-environmental Households and Energy Efficiency in Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 367-393, February.
    9. Levinson, Arik, 2014. "California energy efficiency: Lessons for the rest of the world, or not?," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 269-289.
    10. Li, Huan & Carrión-Flores, Carmen E., 2017. "An analysis of the ENERGY STAR® program in Alachua County, Florida," Ecological Economics, Elsevier, vol. 131(C), pages 98-108.
    11. 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.
    12. Xiaojia Bao, 2016. "Water, Electricity and Weather Variability in Rural Northern China," WISE Working Papers 2014-07-02, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    13. Bao Jiayi & Ho Benjamin, 2015. "Heterogeneous Effects of Informational Nudges on Pro-social Behavior," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(4), pages 1619-1655, October.
    14. Agarwal, Sumit & Rengarajan, Satyanarain & Sing, Tien Foo & Yang, Yang, 2017. "Nudges from school children and electricity conservation: Evidence from the “Project Carbon Zero” campaign in Singapore," Energy Economics, Elsevier, vol. 61(C), pages 29-41.
    15. Anin Aroonruengsawat, Maximilian Auffhammer, and Alan H. Sanstad, 2012. "The Impact of State Level Building Codes on Residential Electricity Consumption," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    16. Shane Fudge & Michael Peters & Steven M. Hoffman & Walter Wehrmeyer (ed.), 2013. "The Global Challenge of Encouraging Sustainable Living," Books, Edward Elgar Publishing, number 14851.
    17. Sudarshan, Anant, 2013. "Deconstructing the Rosenfeld curve: Making sense of California's low electricity intensity," Energy Economics, Elsevier, vol. 39(C), pages 197-207.
    18. Matthew Ranson & Lauren Morris & Alex Kats-Rubin, 2014. "Climate Change and Space Heating Energy Demand: A Review of the Literature," NCEE Working Paper Series 201407, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Dec 2014.
    19. Xavier Labandeira & Ana Ramos, 2012. "Household Environmental Attitudes and Energy Efficiency in Buildings: Evidence from Spanish Data," Working Papers fa08-2012, Economics for Energy.
    20. Dora L. Costa & Matthew E. Kahn, 2011. "Electricity Consumption and Durable Housing: Understanding Cohort Effects," American Economic Review, American Economic Association, vol. 101(3), pages 88-92, May.
    21. Ana Ramos & Xavier Labandeira & Andreas Lšschel, 2015. "Pro-Environmental Households and Energy Efficiency in Spain," Working Papers 01-2015, Economics for Energy.
    22. Fuhai HONG, 2014. "Ideals should not be too ideal: Identity and public good contribution," Economic Growth Centre Working Paper Series 1411, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    23. Arik Levinson, 2014. "How Much Energy Do Building Energy Codes Really Save? Evidence from California," NBER Working Papers 20797, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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