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- Title
Individual Time Preferences and Energy Efficiency<sup>†</sup>.
- Authors
Newell, Richard G.; Siikamäki, Juha
- Abstract
We examine the role of individual discount rates in energy efficiency decisions using evidence from an extensive survey of US homeowners to elicit preferences for energy efficiency and cash flows over time. We find considerable heterogeneity in individual discount rates. We also find that individual time preferences systematically influence willingness to invest in energy efficiency, as measured through product choices, required payback periods, and energy efficiency tax credit claims. Education is a key driver of individual discount rates. Our findings highlight the importance of individual discount rates to understanding energy efficiency investments, the energy-efficiency gap, and policy evaluation.
- Subjects
HOMEOWNERS; ENERGY consumption; DISCOUNT prices; ENERGY consumption in water heaters; ENERGY efficiency of household appliances; HETEROGENEITY; WILLINGNESS to pay; MATHEMATICAL models
- Publication
American Economic Review, 2015, Vol 105, Issue 5, p196
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/aer.p20151010