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Household heterogeneity in valuation of heating energy costs

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  • Sahari, Anna

Abstract

This paper studies consumer heterogeneity in the valuation of lifetime heating energy costs. The valuation is expressed as the willingness to pay higher upfront costs to obtain savings over the lifetime of the heating system. The analysis relies on administrative register data on new residential houses built by private persons in Finland during 2010-2011. The data allow estimating the WTP as a function of several observable household characteristics. The median WTP in the estimation sample is e8, with a range of e2 to e15. Households with higher income and education are estimated to have higher WTP. Other characteristics that impact the WTP are household debt, family type and size, current dwelling status and previous experience of building a house.

Suggested Citation

  • Sahari, Anna, 2021. "Household heterogeneity in valuation of heating energy costs," Working Papers 141, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:141
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    File URL: https://www.doria.fi/handle/10024/180634
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    More about this item

    Keywords

    Willingness to pay; Energy efficiency; Consumer heterogeneity; Environment; energy and climate policy; D12; Q41; Energia; ilmasto ja ympäristö;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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