Abstract:

“Effects of Mandatory Energy Efficiency Disclosure in Housing Markets”
Erica Myers (University of Illinois), Steven Puller (Texas A&M University), and Jeremy West (University of California, Santa Cruz)

We study the effects of a program requiring home sellers to provide buyers with certified audits of residential energy efficiency in Austin, Texas. Using similar nearby houses as a comparison group, we find this requirement increases price capitalization of energy efficiency and encourages energy-saving residential investments. Typical arguments for mandatory audit and disclosure policies focus on home buyers’ ignorance about energy efficiency. However, we demonstrate that home sellers also appear to be ignorant about their homes’ respective efficiency. Our findings support that mandated disclosure can improve market outcomes by providing actionable information to both buyers and sellers.

 

 

 

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