September 21, 2010

Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?

by Lucas W. Davis

- While public discussion of HR 2454 (the "Waxman Markey" bill) has focused on the cap-and-trade program that would be established for carbon emissions, the bill also includes provisions that would tighten energy efficiency standards for consumer appliances. Supporters argue that appliance standards help address a number of market failures. In particular, many studies have pointed out that landlords may buy cheap inefficient appliances when their tenants pay the utility bill. Although this landlord-tenant problem has been widely discussed in the literature, there is little empirical evidence on the magnitude of the distortion. This paper compares appliance ownership patterns between homeowners and renters using household-level data from the Residential Energy Consumption Survey. The results show that, controlling for household income and other household characteristics, renters are significantly less likely to have energy efficient refrigerators, clothes washers and dishwashers.

Davis, L.W. (2010). "Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?" NBER Working Paper No. 16114, Jun 2010.