Moral hazard in the quality of building energy efficiency: Evidence from post-retrofit audits[Aléa moral sur la qualité de l'efficacité énergétique des bâtiments: Evidence à partir de données d'audits post-travaux]

Quality defects in building energy efficiency are a little-studied explanation for the energy performance gap. They are generally attributed to moral hazard -- the difficulty to verify quality creating an incentive for the contractor to under-perform. The evidence so far is only indirect, however, as it focuses on the relationship between the easiness with which contractor's tasks can be checked and energy savings. We fill this gap and provide direct evidence of the relationship between the easiness of verification and the prevalence of defects. We use a French database of 1,460 post-retrofit audits that contain information on both defects and non-defects. We find that both the occurrence of defects and their severity increase when they can be classified as hard, as opposed to easy, to verify. The effects are more pronounced when it comes to energy efficiency works, thereby confirming the importance of moral hazard for the energy efficiency gap. Our results are robust to a range of placebo tests. They call for placing more emphasis on the monitoring and verification of building energy efficiency works.