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How large is the Owner-Renter Divide in Energy Efficient Technology? Evidence from an OECD cross-section

Chandra Kiran B. Krishnamurthy and Bengt Kriström

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.ckri
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Abstract:
When the agent making an investment decision is different from the one bearing the costs of the decision, the outcome (energy usage, here) is socially sub-optimal, a scenario known in the energy efficient technology case as "split incentive" effect. Using a sample of households (from a survey conducted in 2011) from 11 OECD countries, this paper investigates the magnitude of the "split incentive" effect between home occupants who are owners and those who are renters. A wide variety of energy-related "technologies" are considered: appliances, energy efficient bulbs, insulation, heat thermostat, solar panels, ground source heat pumps and wind turbines. Mean difference in patterns of access to these technologies are consistent with the "split incentives" hypothesis. Regression results suggest that, even after controlling for the sizeable differences in observed characteristics, owners are substantially more likely to have access to energy efficient appliances and to better insulation as well as to heat thermostats. For relatively immobile investments such as wind turbines and ground source heat pumps, we find no differences between owners and renters.



Factors Affecting Renters' Electricity Use: More Than Split Incentives

Rohan Best, Paul J. Burke, Shuhei Nishitateno

Year: 2021
Volume: Volume 42
Number: Number 5
DOI: 10.5547/01956574.42.5.rbes
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Abstract:
This paper uses data from the 2015 Residential Energy Consumption Survey to explore the extent to which renters' electricity use in the United States exceeds that of otherwise similar non-renters. Renting households are found to use approximately 9% more electricity than non-renters when controlling for location, socioeconomic, and many appliance-quantity controls. There are multiple factors that explain this extra electricity use, including inferior energy efficiency of appliances, behavioral factors, differences in bill payment responsibilities, and additional reliance by renters on electric space and water heaters. The paper finds that none of these factors are dominant. The phenomenon of renters' (conditionally) higher electricity use is thus best understood as one that emerges from multiple sources.



The Energy Efficiency Gap in the Rental Housing Market: It Takes Both Sides to Build a Bridge

Xavier Lambin, Joachim Schleich, and Corinne Faure

Year: 2023
Volume: Volume 44
Number: Number 1
DOI: 10.5547/01956574.44.1.xlam
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Abstract:
We revisit the issue of the energy efficiency (EE) gap by explicitly acknowledging the two-sided nature of the rental housing market and two-sided asymmetries of information between tenants and landlords. Employing a theoretical matching model, we show that Energy Performance Certificates (EPCs) that signal a dwelling’s energy performance induce optimal EE investments by landlords only if tenants pay their energy expenditures in full. When landlords pay part of the energy expenditures, they seek tenants who will conserve energy. Our model shows that asymmetry of information over tenant characteristics results in suboptimally low investments in EE. This may even render EPCs counterproductive. As a remedy, we show that tenant-side signaling needs to be rolled out jointly with EPCs and may even be sufficient when contracts include energy expenditures. Data from an original survey provides support for these insights and suggests that information on the tenants’ side contributes to more EE investment.



Evidence of a Homeowner-Renter Gap for Electric Appliances

Lucas W. Davis

Year: 2023
Volume: Volume 44
Number: Number 4
DOI: 10.5547/01956574.44.4.ldav
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Abstract:
This paper provides the first empirical analysis of the homeowner-renter gap for electric appliances. Using U.S. nationally representative data, the analysis shows that renters are significantly more likely than homeowners to have electric heat, electric hot water heating, an electric stove, and an electric dryer. The gap is highly statistically significant, prevalent across regions, and holds after controlling for the type, size, and age of the home, as well as for climate and household characteristics. The paper argues that this gap arises from the same split incentives that lead to the "landlord-tenant problem" and discusses the implications of the gap for an emerging set of policies aimed at reducing carbon dioxide emissions through building electrification.





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