Work

The Simpler the Better? Threshold Effects of Energy Labels on Property Prices and Energy Efficiency Investments

Year: 2024

Type: article

Abstract: Using British data on over 7 million residential property sales, we find that the simplified energy efficiency (EE) information leads to important market effects. UK legislation requires the use of an energy label that shows an EE rating score (1–100) mapped into arbitrary color-coded rating bands (A–G). Applying a regression discontinuity design, we document significant price discontinuities at rating band thresholds, indicating heuristic thinking in the market. These price discontinuities influence market behavior as sellers are more likely to make EE investments if their property is just below a threshold. We discuss policy considerations and avenues for future research. (JEL D91, K32, Q48, R31)

Source: American Economic Journal Applied Economics

DOI: 10.1257/app.20220329

Authors: Rodolfo Sejas-Portillo, Mirko Moro, Till Stowasser

Institutions: London School of Economics and Political Science, University of Stirling

Language: English

Topic: Housing Market and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Affordable and clean energy

Open Access status: green

OpenAlex ID: W4405921157