IDEAS home Printed from https://ideas.repec.org/p/zbw/fisisi/s082019.html
   My bibliography  Save this paper

Adoption of retrofit measures among home-owners in EU countries: The effects of access to capital and debt aversion

Author

Listed:
  • Schleich, Joachim
  • Faure, Corinne
  • Meissner, Thomas

Abstract

Energy efficiency policies often involve low-interest loans for retrofit measures in private buildings; the main target of these loans are meant to be households with otherwise poor access to capital. However, such programs can only be successful if the targeted households also take up these loans. This paper stud-ies the relation between access to capital and debt aversion and the adoption of retrofit measures in European Union countries, employing a demographically representative household survey including about 6,600 homeowners in France, Germany, Italy, Poland, Romania, Spain, Sweden, and the United Kingdom. The findings suggest that debt aversion negatively affects the adoption of retro-fit measures by homeowners. In particular, debt-averse homeowners with poor access to capital are less likely to have adopted retrofit measures than non-debt-averse homeowners with poor access to capital. The findings further pro-vide evidence that low-interest loan programs should be targeted at younger homeowners with lower income and less formal education.

Suggested Citation

  • Schleich, Joachim & Faure, Corinne & Meissner, Thomas, 2019. "Adoption of retrofit measures among home-owners in EU countries: The effects of access to capital and debt aversion," Working Papers "Sustainability and Innovation" S08/2019, Fraunhofer Institute for Systems and Innovation Research (ISI).
    • Handle: RePEc:zbw:fisisi:s082019
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/205148/1/1679969404.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Catherine C. Eckel & Cathleen Johnson & Claude Montmarquette & Christian Rojas, 2007. "Debt Aversion and the Demand for Loans for Postsecondary Education," Public Finance Review, , vol. 35(2), pages 233-262, March.
    2. Nair, Gireesh & Gustavsson, Leif & Mahapatra, Krushna, 2010. "Factors influencing energy efficiency investments in existing Swedish residential buildings," Energy Policy, Elsevier, vol. 38(6), pages 2956-2963, June.
    3. Mills, Bradford & Schleich, Joachim, 2014. "Household transitions to energy efficient lighting," Energy Economics, Elsevier, vol. 46(C), pages 151-160.
    4. Olsthoorn, Mark & Schleich, Joachim & Gassmann, Xavier & Faure, Corinne, 2017. "Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment," Energy Economics, Elsevier, vol. 68(S1), pages 33-44.
    5. Qiu, Yueming & Colson, Gregory & Grebitus, Carola, 2014. "Risk preferences and purchase of energy-efficient technologies in the residential sector," Ecological Economics, Elsevier, vol. 107(C), pages 216-229.
    6. Richard G. Newell & Juha Siikamäki, 2015. "Individual Time Preferences and Energy Efficiency," American Economic Review, American Economic Association, vol. 105(5), pages 196-200, May.
    7. Grösche, Peter, 2010. "Housing, energy cost, and the poor: Counteracting effects in Germany's housing allowance program," Energy Policy, Elsevier, vol. 38(1), pages 93-98, January.
    8. Julia Blasch and Claudio Daminato, 2020. "Behavioral Anomalies and Energy-related Individual Choices: The Role of Status-quo Bias," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6), pages 181-214.
    9. Michelsen, Carl Christian & Madlener, Reinhard, 2012. "Homeowners' preferences for adopting innovative residential heating systems: A discrete choice analysis for Germany," Energy Economics, Elsevier, vol. 34(5), pages 1271-1283.
    10. Olsthoorn, Mark & Schleich, Joachim & Faure, Corinne, 2019. "Exploring the diffusion of low-energy houses: An empirical study in the European Union," Energy Policy, Elsevier, vol. 129(C), pages 1382-1393.
    11. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
    12. Farsi, Mehdi, 2010. "Risk aversion and willingness to pay for energy efficient systems in rental apartments," Energy Policy, Elsevier, vol. 38(6), pages 3078-3088, June.
    13. Thomas Meissner, 2016. "Intertemporal consumption and debt aversion: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 281-298, June.
    14. Trotta, Gianluca, 2018. "Factors affecting energy-saving behaviours and energy efficiency investments in British households," Energy Policy, Elsevier, vol. 114(C), pages 529-539.
    15. Ana Ramos & Xavier Labandeira & Andreas Löschel, 2016. "Pro-environmental Households and Energy Efficiency in Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 367-393, February.
    16. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    17. David S. Loughran and Jonathan Kulick, 2004. "Demand-Side Management and Energy Efficiency in the United States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 19-44.
    18. Anna Alberini & Andrea Bigano & Marco Boeri, 2013. "Looking for Free-riding: Energy Efficiency Incentives and Italian Homeowners," Working Papers 2013.24, Fondazione Eni Enrico Mattei.
    19. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, , vol. 13(4), pages 41-74, October.
    20. Marie-Laure Nauleau, 2014. "Free-Riding in Tax Credits For Home Insulation in France: An Econometric Assessment Using Panel Data," Working Papers 2014.26, Fondazione Eni Enrico Mattei.
    21. Erica Field, 2009. "Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 1-21, January.
    22. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    23. Mills, Bradford & Schleich, Joachim, 2010. "What's driving energy efficient appliance label awareness and purchase propensity?," Energy Policy, Elsevier, vol. 38(2), pages 814-825, February.
    24. Marchand, Robert D. & Koh, S.C. Lenny & Morris, Jonathan C., 2015. "Delivering energy efficiency and carbon reduction schemes in England: Lessons from Green Deal Pioneer Places," Energy Policy, Elsevier, vol. 84(C), pages 96-106.
    25. Quang Nguyen & Colin Camerer & Tomomi Tanaka, 2010. "Risk and Time Preferences Linking Experimental and Household Data from Vietnam," Post-Print halshs-00547090, HAL.
    26. Erin E. George & Mary Eschelbach Hansen & Julie Lyn Routzahn, 2018. "Debt Tolerance, Gender, and the Great Recession," Journal of Consumer Affairs, Wiley Blackwell, vol. 52(3), pages 711-732, November.
    27. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    28. Bruderer Enzler, Heidi & Diekmann, Andreas & Meyer, Reto, 2014. "Subjective discount rates in the general population and their predictive power for energy saving behavior," Energy Policy, Elsevier, vol. 65(C), pages 524-540.
    29. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer;Economic Science Association, vol. 2(2), pages 107-127, December.
    30. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2019. "A large-scale test of the effects of time discounting, risk aversion, loss aversion, and present bias on household adoption of energy-efficient technologies," Energy Economics, Elsevier, vol. 80(C), pages 377-393.
    31. Cohen, François & Glachant, Matthieu & Söderberg, Magnus, 2017. "Consumer myopia, imperfect competition and the energy efficiency gap: Evidence from the UK refrigerator market," European Economic Review, Elsevier, vol. 93(C), pages 1-23.
    32. Boomhower, Judson & Davis, Lucas W., 2014. "A credible approach for measuring inframarginal participation in energy efficiency programs," Journal of Public Economics, Elsevier, vol. 113(C), pages 67-79.
    33. Heutel, Garth, 2019. "Prospect theory and energy efficiency," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 236-254.
    34. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    35. Eric Malm, 1996. "An Actions-Based Estimate of the Free Rider Fraction in Electric Utility DSM Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 41-48.
    36. Rosenow, Jan & Bayer, Edith, 2017. "Costs and benefits of Energy Efficiency Obligations: A review of European programmes," Energy Policy, Elsevier, vol. 107(C), pages 53-62.
    37. Corrado Di Maria & Susana Ferreira & Emiliya Lazarova, 2010. "Shedding Light On The Light Bulb Puzzle: The Role Of Attitudes And Perceptions In The Adoption Of Energy Efficient Light Bulbs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(1), pages 48-67, February.
    38. Greene, William, 2010. "Testing hypotheses about interaction terms in nonlinear models," Economics Letters, Elsevier, vol. 107(2), pages 291-296, May.
    39. Mills, Bradford & Schleich, Joachim, 2012. "Residential energy-efficient technology adoption, energy conservation, knowledge, and attitudes: An analysis of European countries," Energy Policy, Elsevier, vol. 49(C), pages 616-628.
    40. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-571, March.
    41. Nauleau, Marie‐Laure, 2014. "Free‐Riding in Tax Credits For Home Insulation in France: An Econometric Assessment Using Panel Data," Energy: Resources and Markets 165796, Fondazione Eni Enrico Mattei (FEEM).
    42. Trotta, Gianluca, 2018. "The determinants of energy efficient retrofit investments in the English residential sector," Energy Policy, Elsevier, vol. 120(C), pages 175-182.
    43. Nauleau, Marie-Laure, 2014. "Free-riding on tax credits for home insulation in France: An econometric assessment using panel data," Energy Economics, Elsevier, vol. 46(C), pages 78-92.
    44. Marie-Laure Nauleau, 2014. "Free-riding on tax credits for home insulation in France: An econometric assessment using panel data," Post-Print hal-01083206, HAL.
    45. Schleich, Joachim, 2019. "Energy efficient technology adoption in low-income households in the European Union – What is the evidence?," Energy Policy, Elsevier, vol. 125(C), pages 196-206.
    46. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
    47. Sébastien Houde, 2018. "How consumers respond to product certification and the value of energy information," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 453-477, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Emily K. Schwartz & Moncef Krarti, 2022. "Review of Adoption Status of Sustainable Energy Technologies in the US Residential Building Sector," Energies, MDPI, vol. 15(6), pages 1-18, March.
    2. Fanghella, Valeria & Guetlein, Marie-Charlotte & Schleich, Joachim & Sebi, Carine, 2023. "Preferences on financing mechanisms for thermal retrofit measures in multi-owner buildings: A discrete choice experiment with landlords and owner-occupiers in France," Resource and Energy Economics, Elsevier, vol. 74(C).
    3. Akhatova, A. & Derkenbaeva, E. & van Leeuwen, E. & Kranzl, L. & Halleck Vega, S. & Hofstede, G.J., 2024. "Who invests in energy retrofits? Mining Dutch homeowners’ data," Energy Policy, Elsevier, vol. 189(C).
    4. Steffen Ahrens & Ciril Bosch-Rosa & Thomas Meissner, 2022. "Intertemporal consumption and debt aversion: a replication and extension," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 8(1), pages 56-84, December.
    5. Schlindwein, L.F. & Montalvo, C., 2023. "Energy citizenship: Accounting for the heterogeneity of human behaviours within energy transition," Energy Policy, Elsevier, vol. 180(C).
    6. Thomas Meissner & David Albrecht, 2022. "Debt Aversion: Theory and Measurement," Papers 2207.07538, arXiv.org, revised Jul 2022.
    7. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2023. "Making the factors underlying the implicit discount rate tangible," Energy Policy, Elsevier, vol. 177(C).
    8. Lisa Hanna Broska & Stefan Vögele & Hawal Shamon & Inga Wittenberg, 2022. "On the Future(s) of Energy Communities in the German Energy Transition: A Derivation of Transformation Pathways," Sustainability, MDPI, vol. 14(6), pages 1-31, March.
    9. Schleich, Joachim & Tu, Gengyang & Faure, Corinne & Guetlein, Marie-Charlotte, 2021. "Would you prefer to rent rather than own your new heating system? Insights from a discrete choice experiment among owner-occupiers in the UK," Energy Policy, Elsevier, vol. 158(C).
    10. David Huckebrink & Valentin Bertsch, 2021. "Integrating Behavioural Aspects in Energy System Modelling—A Review," Energies, MDPI, vol. 14(15), pages 1-26, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2023. "Making the factors underlying the implicit discount rate tangible," Energy Policy, Elsevier, vol. 177(C).
    2. Henningsen, Geraldine & Wiese, Catharina, 2019. "Do Household Characteristics Really Matter? A Meta-Analysis on the Determinants of Households’ Energy-Efficiency Investments," MPRA Paper 101701, University Library of Munich, Germany.
    3. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    4. Olsthoorn, Mark & Schleich, Joachim & Gassmann, Xavier & Faure, Corinne, 2017. "Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment," Energy Economics, Elsevier, vol. 68(S1), pages 33-44.
    5. Olsthoorn, Mark & Schleich, Joachim & Faure, Corinne, 2019. "Exploring the diffusion of low-energy houses: An empirical study in the European Union," Energy Policy, Elsevier, vol. 129(C), pages 1382-1393.
    6. Schleich, Joachim, 2019. "Energy efficient technology adoption in low-income households in the European Union – What is the evidence?," Energy Policy, Elsevier, vol. 125(C), pages 196-206.
    7. Schleich, Joachim & Gassmann, Xavier & Meissner, Thomas & Faure, Corinne, 2019. "A large-scale test of the effects of time discounting, risk aversion, loss aversion, and present bias on household adoption of energy-efficient technologies," Energy Economics, Elsevier, vol. 80(C), pages 377-393.
    8. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    9. Faure, Corinne & Schleich, Joachim, 2020. "Poor energy ratings when appliances convey?," Energy Policy, Elsevier, vol. 139(C).
    10. Julia Blasch & Claudio Daminato, 2018. "Behavioral anomalies and energy-related individual choices: the role of status-quo bias," CER-ETH Economics working paper series 18/300, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    11. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
    12. Thomas Meissner & Xavier Gassmann & Corinne Faure & Joachim Schleich, 2023. "Individual characteristics associated with risk and time preferences: A multi country representative survey," Journal of Risk and Uncertainty, Springer, vol. 66(1), pages 77-107, February.
    13. Fischbacher, Urs & Schudy, Simeon & Teyssier, Sabrina, 2021. "Heterogeneous preferences and investments in energy saving measures," Resource and Energy Economics, Elsevier, vol. 63(C).
    14. Jovović, Ivana & Cirman, Andreja & Hrovatin, Nevenka & Zorić, Jelena, 2023. "Do social capital and housing-related lifestyle foster energy-efficient retrofits? Retrospective panel data evidence from Slovenia," Energy Policy, Elsevier, vol. 179(C).
    15. Gilbert, Ben & LaRiviere, Jacob & Novan, Kevin, 2022. "Uncertainty and additionality in energy efficiency programs," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    16. Drivas, Kyriakos & Rozakis, Stelios & Xesfingi, Sofia, 2019. "The effect of house energy efficiency programs on the extensive and intensive margin of lower-income households’ investment behavior," Energy Policy, Elsevier, vol. 128(C), pages 607-615.
    17. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
    18. Collins, Matthew & Curtis, John, 2018. "Willingness-to-pay and free-riding in a national energy efficiency retrofit grant scheme," Energy Policy, Elsevier, vol. 118(C), pages 211-220.
    19. Sébastien Foudi, 2024. "Are risk attitude, impatience, and impulsivity related to the individual discount rate? Evidence from energy-efficient durable goods," Theory and Decision, Springer, vol. 96(4), pages 627-661, June.
    20. Spyridaki, Niki-Artemis & Stavrakas, Vassilis & Dendramis, Yiannis & Flamos, Alexandros, 2020. "Understanding technology ownership to reveal adoption trends for energy efficiency measures in the Greek residential sector," Energy Policy, Elsevier, vol. 140(C).

    More about this item

    Keywords

    energy efficiency; debt aversion; soft loans; energy policy; econo-metrics;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fisisi:s082019. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/isfhgde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.