IDEAS home Printed from https://ideas.repec.org/p/zbw/rwirep/58.html
   My bibliography  Save this paper

Willingness-to-Pay for Energy Conservation and Free-Ridership on Subsidization – Evidence from Germany

Author

Listed:
  • Grösche, Peter
  • Vance, Colin

Abstract

Understanding the determinants of home-efficiency improvements is significant to a range of energy policy issues, including the reduction of fossil fuel use and environmental protection. This paper analyzes retrofit choices by assembling a unique data set merging a nationwide household survey from Germany with regional data on wages and construction costs. To explore the influence of both heterogeneous preferences and correlation among the utility of alternatives, conditional-, random parameters-, and error components logit models are estimated that parameterize the influence of costs, energy savings, and household-level socioeconomic attributes on the likelihood of undertaking one of 16 renovation options. We use the model coefficients to derive household-specific marginal willingness-to-pay estimates, and with these assess the extent to which free-ridership may undermine the effectiveness of recently implemented programs that subsidize the costs of retrofits.

Suggested Citation

  • Grösche, Peter & Vance, Colin, 2008. "Willingness-to-Pay for Energy Conservation and Free-Ridership on Subsidization – Evidence from Germany," Ruhr Economic Papers 58, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:58
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/26822/1/574458891.PDF
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. repec:cdl:econwp:qt3tb6j874 is not listed on IDEAS
    3. repec:cdl:uctcwp:qt3tb6j874 is not listed on IDEAS
    4. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, , vol. 13(4), pages 41-74, October.
    5. David Hensher & William Greene, 2003. "The Mixed Logit model: The state of practice," Transportation, Springer, vol. 30(2), pages 133-176, May.
    6. David A. Hensher & Stewart Jones & William H. Greene, 2007. "An Error Component Logit Analysis of Corporate Bankruptcy and Insolvency Risk in Australia," The Economic Record, The Economic Society of Australia, vol. 83(260), pages 86-103, March.
    7. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, May.
    8. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
    9. Banfi, Silvia & Farsi, Mehdi & Filippini, Massimo & Jakob, Martin, 2008. "Willingness to pay for energy-saving measures in residential buildings," Energy Economics, Elsevier, vol. 30(2), pages 503-516, March.
    10. repec:cdl:uctcwp:qt1j6814b3 is not listed on IDEAS
    11. Eric Malm, 1996. "An Actions-Based Estimate of the Free Rider Fraction in Electric Utility DSM Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 41-48.
    12. Quigley, John M & Rubinfeld, Daniel L, 1989. "Unobservables in Consumer Choice: Residential Energy and the Demand for Comfort," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 416-425, August.
    13. King, Gary & Honaker, James & Joseph, Anne & Scheve, Kenneth, 2001. "Analyzing Incomplete Political Science Data: An Alternative Algorithm for Multiple Imputation," American Political Science Review, Cambridge University Press, vol. 95(1), pages 49-69, March.
    14. Train, Kenneth E., 1994. "Estimation of net savings from energy-conservation programs," Energy, Elsevier, vol. 19(4), pages 423-441.
    15. repec:cdl:econwp:qt1j6814b3 is not listed on IDEAS
    16. Hartman, Raymond S, 1988. "Self-Selection Bias in the Evaluation of Voluntary Energy Conservation Programs," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 448-458, August.
    17. Cameron, Trudy Ann, 1985. "A Nested Logit Model of Energy Conservation Activity by Owners of Existing Single Family Dwellings," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 205-211, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Grösche & Colin Vance, 2008. "Willingness-to-Pay for Energy Conservation and Free-Ridership on Subsidization – Evidence from Germany," Ruhr Economic Papers 0058, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. repec:zbw:rwirep:0058 is not listed on IDEAS
    3. Peter Grösche & Colin Vance, 2009. "Willingness to Pay for Energy Conservation and Free-Ridership on Subsidization: Evidence from Germany," The Energy Journal, , vol. 30(2), pages 135-154, April.
    4. Grösche Peter & Schmidt Christoph M. & Vance Colin, 2013. "Identifying Free-riding in Home Renovation Programs Using Revealed Preference Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(5-6), pages 600-618, October.
    5. Nicholas Rivers and Leslie Shiell, 2016. "Free-Riding on Energy Efficiency Subsidies: the Case of Natural Gas Furnaces in Canada," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    6. Anna Alberini, Will Gans, and Charles Towe, 2016. "Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    7. Achtnicht, Martin, 2011. "Do environmental benefits matter? Evidence from a choice experiment among house owners in Germany," Ecological Economics, Elsevier, vol. 70(11), pages 2191-2200, September.
    8. Galassi, Veronica & Madlener, Reinhard, 2017. "The Role of Environmental Concern and Comfort Expectations in Energy Retrofit Decisions," Ecological Economics, Elsevier, vol. 141(C), pages 53-65.
    9. Schueftan, Alejandra & Aravena, Claudia & Reyes, René, 2021. "Financing energy efficiency retrofits in Chilean households: The role of financial instruments, savings and uncertainty in energy transition," Resource and Energy Economics, Elsevier, vol. 66(C).
    10. Pepermans, Guido, 2014. "Valuing smart meters," Energy Economics, Elsevier, vol. 45(C), pages 280-294.
    11. Wasi, Nada & Carson, Richard T., 2013. "The influence of rebate programs on the demand for water heaters: The case of New South Wales," Energy Economics, Elsevier, vol. 40(C), pages 645-656.
    12. Dan Marsh & Lena Mkwara & Riccardo Scarpa, 2011. "Do Respondents’ Perceptions of the Status Quo Matter in Non-Market Valuation with Choice Experiments? An Application to New Zealand Freshwater Streams," Sustainability, MDPI, vol. 3(9), pages 1-23, September.
    13. Frick, Bernd & Barros, Carlos Pestana & Prinz, Joachim, 2010. "Analysing head coach dismissals in the German "Bundesliga" with a mixed logit approach," European Journal of Operational Research, Elsevier, vol. 200(1), pages 151-159, January.
    14. Jürgen Meyerhoff & Ulf Liebe, 2009. "Status Quo Effect in Choice Experiments: Empirical Evidence on Attitudes and Choice Task Complexity," Land Economics, University of Wisconsin Press, vol. 85(3), pages 515-528.
    15. Basu, Debasis & Hunt, John Douglas, 2012. "Valuing of attributes influencing the attractiveness of suburban train service in Mumbai city: A stated preference approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(9), pages 1465-1476.
    16. Deka, Devajyoti & Carnegie, Jon, 2021. "Predicting transit mode choice of New Jersey workers commuting to New York City from a stated preference survey," Journal of Transport Geography, Elsevier, vol. 91(C).
    17. Christian A. Oberst & Reinhard Madlener, 2015. "Prosumer Preferences Regarding the Adoption of Micro†Generation Technologies: Empirical Evidence for German Homeowners," Working Papers 2015.07, International Network for Economic Research - INFER.
    18. Czajkowski, Mikołaj & Bartczak, Anna & Giergiczny, Marek & Navrud, Stale & Żylicz, Tomasz, 2014. "Providing preference-based support for forest ecosystem service management," Forest Policy and Economics, Elsevier, vol. 39(C), pages 1-12.
    19. Aalbers, Rob & van der Heijden, Eline & Potters, Jan & van Soest, Daan & Vollebergh, Herman, 2009. "Technology adoption subsidies: An experiment with managers," Energy Economics, Elsevier, vol. 31(3), pages 431-442, May.
    20. Stefania Troiano & Daniel Vecchiato & Francesco Marangon & Tiziano Tempesta & Federico Nassivera, 2019. "Households’ Preferences for a New ‘Climate-Friendly’ Heating System: Does Contribution to Reducing Greenhouse Gases Matter?," Energies, MDPI, vol. 12(13), pages 1-19, July.
    21. Giergiczny, Marek & Czajkowski, Mikołaj & Żylicz, Tomasz & Angelstam, Per, 2015. "Choice experiment assessment of public preferences for forest structural attributes," Ecological Economics, Elsevier, vol. 119(C), pages 8-23.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:rwirep:58. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/rwiesde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.