Turning the heat up. How sensitive are households to fiscal incentives on energy efficiency investments?

This article studies the sensitivity of French households to fiscal incentives, focusing on the French tax credit on home energy efficient renovations. We estimate the ajustment of the householdsaverage expenditures after an unexpected increase in the tax credit rate (intensive margin). This evaluation complements Maurouxs (2012) results on the number of additional beneficiaries (extensive margin). In 2006, a reform was restricted to new owners of pre-1977 dwellings, allowing us to develop an original difference-in-differences model. It is combined with a Tobit model and censored quantile regressions and estimated on exhaustive fiscal data. In reaction to this tax credit increase, households increased their housing improvement expenditures. This effect appears to be highly heterogeneous depending on the level of expenditures and households characteristics. On average the final net expenditures would have stayed constant. The multiplier of this program is assessed at 1.5, due to the extensive margin.