Market Barriers to Conservation: Are Implicit Discount Rates Too High?
- Creators
- Dubin, Jeffrey A.
Abstract
This paper reconsiders whether implicit discount rates, generally cited as a market barrier to conservation, are really too high, and demonstrates that probabilistic choice studies of consumer durable purchases and hedonic housing price regression studies measure similar but non-identical discount factors. Four hedonic regression studies are reviewed which attempt to ascertain whether and to what extent the housing market capitalizes energy conservation investments. A theoretical model is presented which links the probabilistic choice and hedonic regression methods and shows how using results from both studies allows measurement of individual discount rates without bias. The paper identifies several factors which cause the degree of capitalization to differ from unity, resulting in consumer decisions which are rational from the individual perspective, but which can lead to low levels of social conservation.
Additional Information
This paper was presented at the Program on Workable Energy Regulation Conference on The Economics of Energy Conservation held at U.C. Berkeley on June 26, 1992. The comments of the discussants, Charles Lave and Steven Stoft, were greatly appreciated. I wish to acknowledge the research assistance of Kristina Sepetys and P. Scott Burton, and would like to thank Louis L. Wilde and Charles C. Cicchetti for their comments and suggestions.Attached Files
Submitted - sswp802.pdf
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Additional details
- Eprint ID
- 80913
- Resolver ID
- CaltechAUTHORS:20170829-140258761
- Created
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2017-08-30Created from EPrint's datestamp field
- Updated
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2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 802