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Energy Efficiency, Home Improvements, and the Accumulation of Wealth

Author

Listed:
  • Martijn Dröes
  • Yasmine Van der Straten

Abstract

This paper shows that lower-income households are less likely to do energy efficiency enhancing home improvements. At the same time, higher-income households sort themselves into homes that are already more energy efficient to begin with. Over a 10-year horizon, the combined effect of energy savings accumulate to 12% of median net wealth, with ex ante sorting explaining 65% of this effect. If all households, regardless of income, had the same high energy-efficient home and the same rate of home improvement, the Gini coefficient on net wealth would be 1.7 percent lower over a 10-year period. These results show that households become green to varying degrees and that this has a fundamental impact on the accumulation and distribution of wealth.

Suggested Citation

  • Martijn Dröes & Yasmine Van der Straten, 2024. "Energy Efficiency, Home Improvements, and the Accumulation of Wealth," ERES eres2024-145, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2024-145
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    File URL: https://architexturez.net/system/files/P_20240115220647_3121.pdf
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    More about this item

    Keywords

    Energy Efficiency; home improvements; Wealth;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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