Modeling long term investment decisions in housing and transportation

Abstract

This paper for the first time addresses trade-offs between long-term energy efficiency investments in two major areas: housing and transport, e.g., retrofitting the house versus purchasing a more efficient car. The main question is whether homeowners treat their energy consumption and related expenses as one single budget or as two separate ones. A survey of homeowners (owner-occupiers) was conducted to study this issue. It comprised questions about their households, houses and car fleets as well as a relevant series of nine Stated Preference experiments with various listed energy prices. The resulting (personalized) energy costs were shown to the respondents along with the following optional ways to lower them: insulate the house (1), install a heat pump (2), buy a more efficient car (3), and switch to public transport (4). The alternatives differed with regard to the investment sum, the expected savings, the expected CO2 reduction and the expected annual mileage. The data were used to estimate a Multinomial Logit to predict the homeowners investment decisions regarding energy efficiency and private transport mobility tools. The model included socioeconomic variables, variables pertaining to the condition of the houses, the composition of the private transport fleets and energy prices.