On the Economics of Energy Labels in the Housing Market

with Dirk Brounen, Journal of Environmental Economics and Management (2011)

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This paper reports the first evidence on the market adoption and economic implications of energy performance certificates implemented by the European Union. The results show that adoption rates are low and declining over time, coinciding with negative sentiment regarding the label in the popular media. Labels are clustered among smaller, post-war homes in neighborhoods with more difficult selling conditions. We also document that the adoption rates of energy labels have a positive relation to the number of “green” voters during the 2006 national elections. Within the sample of labeled homes, the energy label creates transparency in the energy performance of dwellings. Our analysis shows that consumers capitalize this information into the price of their prospective homes.