January 30, 2011

Electricity Consumption and Durable Housing: Understanding Cohort Effects

by Dora L. Costa and Matthew E. Kahn

- We find that households living in California homes built in the 1960s and 1970s had high electricity consumption in 2000 relative to houses of more recent vintages because the price of electricity at the time of home construction was low. Homes built in the early 1990s had lower electricity consumption than homes of earlier vintages because the price of electricity was higher. The elasticity of the price of electricity at the time of construction was -0.22. As homes built between 1960 and 1989 become a smaller share of the housing stock, average household electricity purchases will fall.

Costa, D.L. and M.E. Kahn (2011). "Electricity Consumption and Durable Housing: Understanding Cohort Effects." NBER Working Paper No. 16732, Jan 2011.