Heterogeneity in the Eff ect of Home Energy

A longstanding question in the study of energy demand concerns the role of information as a determinant of home-effi ciency improvements. Although the provision of information via home energy audits is frequently asserted to be an eff ective means for governments to encourage the implementation of effi ciency-enhancing renovations, empirical support for this assertion is tenuous at best. Apart from self-selection issues with respect to receiving an audit, two other factors have complicated attempts to measure their eff ect: fi rst, the nature of the information provided by the audit is typically unobserved, and, second, the response to this information may vary over households. Using household-level data from Germany, we address both sources of heterogeneity by estimating a random-parameter model of four retrofi tting alternatives. In addition to confi rming the importance of costs and savings as determinants of renovation choices, our results suggest that the eff ects of consultancy vary substantially across households, with some households responding negatively to the provision of information. JEL Classifi cation: C35, D81, Q41