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Abstract

Interest in energy efficiency has grown in recent years as a result of increasing energy prices and greater concern for the externalities generated by fossil fuel combustion. Although energy efficiency measures have the potential to generate win-win situations whereby households gain financial benefits from reduced energy costs and society benefits from the generation of fewer energy consumption related externalities, energy efficiency appears to suffer from underinvestment. One potential explanation for this underinvestment is the lack of information that households and landlords have regarding the savings associated with energy efficiency measures. In this paper we test three types of energy efficiency strategies in an experimental design that utilizes institutionally owned homes that are rented to college students. Using data on actual natural gas consumption during the heating season, our results indicate modest energy savings associated with the installation of attic insulation and the provision of financial incentives for conservation. These results are supported by observations of ambient temperature data, which show that households receiving incentives, on average, reduced the ambient air temperature by 1.5 degrees F.

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