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

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.

Keywords

Principal-Agent Problem; Split Incentives; Energy Efficiency

Published in

Energy Journal
2015, Volume: 36, number: 4, pages: 85-104

SLU Authors

• Kriström, Bengt

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    

Sustainable Development Goals

SDG7 Affordable and clean energy


UKÄ Subject classification

Economics


Publication identifier

DOI: https://doi.org/10.5547/01956574.36.4.ckri

Permanent link to this page (URI)

https://res.slu.se/id/publ/66426