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Producer And Consumer Responses To Green Housing Labels

Author

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  • Sharon Shewmake
  • W. Kip Viscusi

Abstract

We find “green” labels increase residential property values by an average of 5%. This premium varies by label stringency and across market segments. Builders respond to the stringency of labels by strategically incorporating green features to achieve higher ratings. This strategy seems reasonable as there is no market premium for green features that lead to scores between label rating cutoff values. These results raise important questions as to how green label policies should be designed in order to foster the supply of green features. Gradations of green attributes are influential, particularly for highly rated homes. The most stringent labels have the greatest role at the high price end of the market. (JEL Q20, Q40, R31)

Suggested Citation

  • Sharon Shewmake & W. Kip Viscusi, 2015. "Producer And Consumer Responses To Green Housing Labels," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 681-699, January.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:1:p:681-699
    DOI: 10.1111/ecin.12140
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    Citations

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    Cited by:

    1. Belaïd, Fateh & Flambard, Véronique, 2023. "Boosting buildings energy efficiency: The impact of social norms and motivational feedback," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 26-39.
    2. Florian Fizaine & Pierre Voye & Catherine Baumont, 2018. "Does the Literature Support a High Willingness to Pay for Green Label Buildings? An Answer with Treatment of Publication Bias," Revue d'économie politique, Dalloz, vol. 128(5), pages 1013-1046.
    3. Atasoy, Ayse Tugba, 2020. "Behavioral responses of green builders to discontinuous certification schemes," Resource and Energy Economics, Elsevier, vol. 60(C).
    4. Reid Dorsey-Palmateer, 2020. "Outsized impacts of residential energy and utility costs on household financial distress," Economics Bulletin, AccessEcon, vol. 40(4), pages 3061-3070.
    5. Bovay, John, 2021. "Moral hazard under discrete information disclosure: Evidence from food-safety inspections," 2021 Allied Social Sciences Association (ASSA) Annual Meeting (Virtual), January 3-5, 2021, San Diego, California 307948, Agricultural and Applied Economics Association.
    6. Florian Fizaine Fizaine & Pierre Voye & Catherine Baumont, 2018. "Les études hédoniques soutiennent-elles une valeur verte élevée dans le bâtiment ? Une réponse par la méta-analyse," Post-Print halshs-01957447, HAL.
    7. Maria-Francisca Cespedes-Lopez & Raul-Tomas Mora-Garcia & V. Raul Perez-Sanchez & Juan-Carlos Perez-Sanchez, 2019. "Meta-Analysis of Price Premiums in Housing with Energy Performance Certificates (EPC)," Sustainability, MDPI, vol. 11(22), pages 1-59, November.
    8. Fong-Yao Chen & Jen-Hsu Liang & Michael Y. Mak, 2022. "Effects of Green Attributes on Residential Price in Taiwan," International Real Estate Review, Global Social Science Institute, vol. 25(3), pages 307-331.
    9. Marc Rysman & Timothy Simcoe & Yanfei Wang, 2020. "Differentiation Strategies in the Adoption of Environmental Standards: LEED from 2000 to 2014," Management Science, INFORMS, vol. 66(9), pages 4173-4192, September.
    10. Franz Fuerst & Ben Dalton, 2019. "Gibt es einen wissenschaftlichen Konsens zur Wirtschaftlichkeit nachhaltiger Immobilien? [Is there a scientific consensus on the economic viability of sustainable buildings?]," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 5(1), pages 173-191, November.
    11. W. Kip Viscusi, 2022. "Efficiency criteria for nudges and norms," Public Choice, Springer, vol. 191(3), pages 465-482, June.
    12. Collins, Matthew & Curtis, John, 2018. "Bunching of residential building energy performance certificates at threshold values," Applied Energy, Elsevier, vol. 211(C), pages 662-676.

    More about this item

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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