Authors: Becky Russell
June 1, 2006
Joint Center for Housing Studies, Harvard University

Current increases in the cost of home energy have placed focus on consumer behavior relative to home energy efficiency. For as much attention as the topic receives, its analysis, however, is widely lacking. This paper examines home energy costs and energy related remodeling activity, addressing the question of whether or not rising home energy costs lead to increased investments in energy efficient retrofits. This paper looks at the pattern of home energy costs since the 1970s, short and long term household responses to shocks in the cost of home energy, demographic characteristics and the probability of investments in efficiency, and finally, the actual levels of expenditures on energy efficient retrofits in recent years. The results suggest that the cost of home energy has only a limited impact on energy efficient retrofits, and that these efficiency investments tend to occur years after price increases in home energy costs.

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