Producer and Consumer Responses to Green Housing Labels

47 Pages Posted: 4 Jun 2014 Last revised: 11 Jun 2014

See all articles by Sharon Shewmake

Sharon Shewmake

Western Washington University - Economics

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

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Date Written: June 2, 2014

Abstract

We find “green” labels increase residential property values by an average of 5%. This premium varies by label stringency and across market segments. Builders respond to the stringency of labels by strategically incorporating green features to achieve higher ratings. This strategy seems reasonable as there is no market premium for green features that lead to scores between label rating cutoff values. These results raise important questions as to how green label policies should be designed in order to foster the supply of green features. Gradations of green attributes are influential, particularly for highly rated homes. The most stringent labels have the greatest role at the high price end of the market.

Keywords: Energy Efficiency, Housing Labels, Environmental Labels, Hedonic Model

JEL Classification: Q20, Q40, R31

Suggested Citation

Shewmake, Sharon and Viscusi, W. Kip, Producer and Consumer Responses to Green Housing Labels (June 2, 2014). Economic Inquiry, Forthcoming, Vanderbilt Law and Economics Research Paper No. 14-19, Available at SSRN: https://ssrn.com/abstract=2444847 or http://dx.doi.org/10.2139/ssrn.2444847

Sharon Shewmake

Western Washington University - Economics ( email )

United States

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

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