Presentation Title

The Principal-Agent Problem and Residential Energy Efficiency

Advisor Information

Catherine Co

Location

Milo Bail Student Center Dodge Room B

Presentation Type

Oral Presentation

Start Date

8-3-2013 9:15 AM

End Date

8-3-2013 9:30 AM

Abstract

Despite increased support for residential energy efficiency programs by state and local governments, the adoption of energy-saving technologies continues to lag behind expected values. Economists have identified conflicting incentives between the landlords responsible for purchasing such technologies and the tenants responsible for paying utility bills as a potential contributor to this gap. I apply a logit model to data from the 2009 Residential Energy Consumption Survey to determine the effects of this principal-agent (PA) problem and various incentive programs on a household's decision to invest in two different kinds of energy-saving technologies. I find that the PA problem is particularly pronounced for weatherization improvements, an important finding as these investments have an especially high potential for reducing energy consumption. I also find evidence that existing incentive programs are already somewhat well-tailored to this need, as they perform particularly well in encouraging weatherization improvements as compared to other kinds of energy-saving technologies.

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Mar 8th, 9:15 AM Mar 8th, 9:30 AM

The Principal-Agent Problem and Residential Energy Efficiency

Milo Bail Student Center Dodge Room B

Despite increased support for residential energy efficiency programs by state and local governments, the adoption of energy-saving technologies continues to lag behind expected values. Economists have identified conflicting incentives between the landlords responsible for purchasing such technologies and the tenants responsible for paying utility bills as a potential contributor to this gap. I apply a logit model to data from the 2009 Residential Energy Consumption Survey to determine the effects of this principal-agent (PA) problem and various incentive programs on a household's decision to invest in two different kinds of energy-saving technologies. I find that the PA problem is particularly pronounced for weatherization improvements, an important finding as these investments have an especially high potential for reducing energy consumption. I also find evidence that existing incentive programs are already somewhat well-tailored to this need, as they perform particularly well in encouraging weatherization improvements as compared to other kinds of energy-saving technologies.