Working Paper: NBER ID: w15978
Authors: Dora L. Costa; Matthew E. Kahn
Abstract: We use detailed microeconomic data to investigate why aggregate residential electricity consumption in California has been flat since 1980. Using unique micro data, we document the role that household demographics and ideology play in determining electricity demand. We show that building codes have been effective for homes built after 1983. We find that houses built in the 1970s and early 1980s were energy inefficient relative to houses built before 1960 because the price of electricity at the time of construction was low. Employing our regression estimates, we construct an aggregate residential electricity consumption time series index from 1980 to 2006. We show that certain micro determinants of household electricity consumption such as the phase in of building codes explain California's flat consumption while other factors (such as rising incomes and increased new home sizes) go in the opposite direction. Because homes are long-lived durables, we have not yet seen the full impact of building codes on California's electricity consumption.
Keywords: Electricity consumption; California; Energy efficiency; Building codes; Household demographics
JEL Codes: D01; Q41; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Building codes implemented after 1983 (L78) | improved energy efficiency in newer homes (Q41) |
| improved energy efficiency in newer homes (Q41) | lower overall consumption (D19) |
| Rising incomes and increasing home sizes (R21) | higher energy consumption (Q41) |
| Homes built in the 1970s and early 1980s (R21) | less energy efficient (Q41) |
| Low electricity prices at the time of construction (L94) | negatively correlate with current energy consumption (Q41) |
| Liberal-environmentalist ideologies (P18) | consume less electricity (Q41) |
| Registered Democrats and Greens (J79) | purchase significantly fewer kilowatt-hours than Republicans (D19) |
| Phase-in of building codes (L78) | partially offset rising household income and larger home sizes on electricity consumption (D19) |
| Trend towards more energy-efficient homes (Q41) | continue as older, less efficient homes are gradually replaced (R21) |