Robert Stavins, HEEP Director, Todd Gerarden, HEEP Pre-Doctoral Fellow, and Richard Newell, former HEEP Pre-Doctoral Fellow, co-authored an article published in December 2017 in the Journal of Economic Literature, titled “Assessing the Energy-Efficiency Gap.” Mr. Gerarden is a Ph.D. candidate in Public Policy at Harvard Kennedy School; Dr. Newell received his Ph.D. in Public Policy in 1997. Dr. Newell is now President of Resources for the Future, a leading think-tank in Washington D.C. focusing on environmental economics and policy. During the time that he collaborated on this project, he was a professor at Duke University.
The paper is available online here. It builds upon a research project that HEEP conducted with the Duke University Energy Initiative in 2013 – 2014. The project was supported by the Alfred P. Sloan Foundation. The project included a research workshop conducted at Harvard Kennedy School on October 24 – 25, 2013, in which twenty of the leading social scientists studying the adoption of energy-saving technology participated. Gerarden, Newell, and Stavins released a major report in January 2015, on which the recently-published paper is based, also titled “Assessing the Energy-efficiency Gap.”
Abstract of the paper:
Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but it has long been observed that these technologies may not be adopted by individuals and firms to the degree that might be justified, even on a purely financial basis. We survey the relevant literature on this “energy-efficiency gap” by presenting two complementary frameworks. First, we divide potential explanations for the energy-efficiency gap into three categories: market failures, behavioral explanations, and model and measurement errors. Second, we organize previous research in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices cost minimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We synthesize academic research on these questions, with an emphasis on recent empirical findings, and offer suggestions for future research.