Working Paper: NBER ID: w31344
Authors: Lucas W. Davis
Abstract: One concern with subsidies for low-carbon technologies is that they tend to go predominantly to high-income households. Previous research has shown, for example, that the top income quintile receives 60% of subsidies for rooftop solar and 90% of subsidies for electric vehicles. This paper finds that heat pumps are an important exception. Using newly available U.S. nationally representative data, the paper finds that there is remarkably little correlation between heat pump adoption and household income. Nationwide, 14% of U.S. households have a heat pump as their primary heating equipment, and adoption levels are essentially identical for all income levels ranging from the bottom of the income distribution (<$30,000 annually) to the top ($150,000+). Instead, the paper shows that heat pump adoption is strongly correlated with geography, climate, and electricity prices.
Keywords: heat pumps; adoption; subsidies; low-carbon technologies; income distribution
JEL Codes: H23; L51; Q41; Q42; Q48; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Heat pump adoption (Q41) | Household income (D19) |
| Heat pump adoption (Q41) | Geographical factors (R12) |
| Heat pump adoption (Q41) | Climate conditions (Q54) |
| Heat pump adoption (Q41) | Electricity prices (L97) |
| Electricity prices (L97) | Heat pump adoption (Q41) |
| Heat pump subsidies (H23) | Carbon abatement (Q52) |
| Electric vehicle subsidies (H23) | Carbon abatement (Q52) |