Sage Journals: Discover world-class research

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.

Keywords

Electrification mandates Natural gas bans Electric-preferred building codes Landlord-tenant problem Principal-agent problem Split incentives

Get full access to this article

View all access options for this article.

References

Allcott

Greenstone

(2012). “Is There an Energy Efficiency Gap?” Journal of Economic Perspectives 26(1): 3–28. https://doi.org/10.1257/jep.26.1.3.

Aydin

Eicholtz

Holtermans

(2019). “Split Incentives and Energy Efficiency: Evidence from the Dutch Housing Market” Working Paper. https://doi.org/10.1016/j.jue.2020.103243.

Best

Burke

P. J.

Nishitateno

(2021). “Factors Affecting Renters’ Electricity Use: More Than Split Incentives.” The Energy Journal 42(5). https://doi.org/10.5547/01956574.42.5.rbes.

Bhutta

Bricker

Chang

A.C.

Dettling

L.J.

Goodman

S.F.

Volz

A.H.

Hsu

J.W.

Moore

K.B.

Reber

Windle

, (2020). “Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances.” Federal Reserve Bulletin 106(5): 1–42. https://doi.org/10.17016/bulletin.2020.106.

Blumstein

Krieg

Schipper

York

(1980). “Overcoming Social and Institutional Barriers to Energy Conservation.” Energy 5(4): 355–371. https://doi.org/10.1016/0360-5442(80)90036-5.

Davis

L.W.

(2012). “Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?” In The Design and Implementation of U.S. Climate Policy, University of Chicago Press 301–316. https://doi.org/10.7208/chicago/9780226921983.003.0020.

Davis

L.W.

(2021). “What Matters for Electrification? Evidence from 70 Years of U.S. Home Heating Choices.” NBER Working Paper. https://doi.org/10.3386/w28324.

Dubin

J.A.

McFadden

D.L.

(1984). “An Econometric Analysis of Residential Electric Appliance Holdings and Consumption” Econometrica 52(2): 345–362. https://doi.org/10.2307/1911493.

Gerarden

T.D.

Newell

R.G.

Stavins

R.N.

(2017). “Assessing the Energy-Efficiency Gap” Journal of Economic Literature 55(4): 1486–1525. https://doi.org/10.1257/jel.20161360.

10.

Gillingham

Harding

Rapson

(2012). “Split Incentives in Residential Energy Consumption.” The Energy Journal 33(2): 37–62. https://doi.org/10.5547/01956574.33.2.3.

11.

Gillingham

Newell

R.G.

Palmer

(2009). “Energy Efficiency Economics and Policy.” Annual Review of Resource Economics 1(1): 597–620. https://doi.org/10.1146/annurev.resource.102308.124234.

12.

Gillingham

Palmer

(2014). “Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence.” Review of Environmental Economics and Policy 8(1): 18–38. https://doi.org/10.1093/reep/ret021.

13.

Hausman

J.A.

(1979). “Individual Discount Rates and the Purchase and Utilization of Energy-using Durables.” Bell Journal of Economics 10(1): 33–54. https://doi.org/10.2307/3003318.

14.

Holland

S.P.

Mansur

E.T.

Muller

N.Z.

Yates

A.J.

(2020). “Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity Generation.” American Economic Journal: Economic Policy 12(4): 244–274. https://doi.org/10.1257/pol.20190390.

15.

Jaffe

A.B.

Stavins

R.N.

(1994). “The Energy-Efficiency Gap What Does it Mean?” Energy Policy 22(10): 804–810. https://doi.org/10.1016/0301-4215(94)90138-4.

16.

Krishnamurthy, C.K.B. and B. Kriström (2015). “How Large is the Owner-Renter Divide in Energy Efficient Technology? Evidence from an OECD Cross-Section” The Energy Journal 36(4): 85–104. https://doi.org/10.5547/01956574.36.4.ckri.

17.

Larson

Greig

Jesse

Mayfield

Pascale

Zhang

Drossman

, (2020). Net-Zero America: Potential Pathways, Infrastructure and Impacts. Princeton, New Jersey: Princeton University.

18.

Lebel

E.D.

Finnegan

C.J.

Ouyang

Jackson

R.B.

(2022). “Methane and NOx Emissions from Natural Gas Stoves, Cooktops, and Ovens in Residential Homes.” Environmental Science &Technology. https://doi.org/10.1021/acs.est.1c04707.

19.

Levinson

Niemann

(2004). “Energy Use by Apartment Tenants when Landlords Pay for Utilities.” Resource and Energy Economics 26(1): 51–75. https://doi.org/10.1016/S0928-7655(03)00047-2.

20.

Maruejols

Young

(2011). “Split Incentives and Energy Efficiency in Canadian Multi-Family Dwellings.” Energy Policy 39(6): 3655–3668. https://doi.org/10.1016/j.enpol.2011.03.072.

21.

Melvin

(2018). “The Split Incentives Energy Efficiency Problem: Evidence of Underinvestment by Landlords.” Energy Policy 115: 342–352. https://doi.org/10.1016/j.enpol.2017.11.069.

22.

Myers

(2020). “Asymmetric Information in Residential Rental Markets: Implications for the Energy Efficiency Gap.” Journal of Public Economics 190: 104251. https://doi.org/10.1016/j.jpubeco.2020.104251.

23.

National Academies of Sciences, Engineering, and Medicine (2021). Accelerating Decarbonization of the U.S. Energy System. The National Academies Press: Washington, DC, USA .

24.

Souza

(2018). “Why are Rented Dwellings Less Energy-Efficient? Evidence from a Representative Sample of the U.S. Housing Stock.” Energy Policy 118: 149–159. https://doi.org/10.1016/j.enpol.2018.03.013.

25.

Williams

J.H.

Jones

R.A.

Haley

Kwok

Hargreaves

Farbes

Torn

M.S.

(2021). “Carbon-Neutral Pathways for the United States.” AGU Advances 2(1). https://doi.org/10.1029/2020AV000284.

Supplementary Material

Please find the following supplemental material available below.

For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.

For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.

0.00 MB

0.03 MB

Evidence of a Homeowner-Renter Gap for Electric Appliances

Abstract

Keywords

Get full access to this article

References

Supplementary Material