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- Title
Split Incentives in Residential Energy Consumption.
- Authors
Gillingham, Kenneth; Harding, Matthew; Rapson, David
- Abstract
We explore two split incentive issues between owners and occupants of residential dwellings: heating or cooling incentives are suboptimal when the occupant does not pay for energy use, and insulation incentives are suboptimal when the occupant cannot perfectly observe the owner's insulation choice. We empirically quantify the effect of these two market failures and how they affect behavior in California. We find that those who pay are 16 percent more likely to change the heating setting at night and owner-occupied dwellings are 20 percent more likely to be insulated in the attic or ceiling. However, in contrast to common conception, we find that only small overall energy savings may be possible from policy interventions aimed at correcting the split incentive issues.
- Subjects
MARKET failure; HOUSEHOLD ecology; HOUSEHOLD pests; ECOLOGY; U.S. states
- Publication
Energy Journal, 2012, Vol 33, Issue 2, p37
- ISSN
0195-6574
- Publication type
Article
- DOI
10.5547/01956574.33.2.3