Helping householders choose: Variation in preferences for aspects of

energy-efficiency improvements

Paul Thorsnes

Department of Economics

&

Centre for Sustainability

upgrading houses to be

warm, healthy

and energy efficient

in a context of considerable diversity!

A big objective…

Diversity in climates…

Temperature Sunshine Rainfall

Diversity in households…

and diversity in the housing stock…

Diversity in retrofits…

Retrofits vary greatly in a

variety of characteristics

They need to:

work well with the house

and with each other

fit well with household

norms and practices

Choosing retrofits can

require complex trade-offs

Simple outcome, that requires complex inputs…

We investigated this question using choice surveys

First step: identify aspects in which energy retrofits vary

In separate surveys we asked home owners to:

1. identify the six aspects they care most about

2. indicate their willingness to make trade-offs among a particular set of aspects

In each case, we identified clusters of respondents

with similar preferences for characteristics

How do NZers vary in their willingness to make trade-offs?

Sample #1

149 owner-occupiers in Dunedin

recruited from three census area units (suburbs)

that together house a wide demographic range of households

Respondent AGE Gender Qualification

Household income Household composition

House vintage House insulation

What did we find?

Both consistency

Value for money (~85%)

Works reliably (~70%)

As energy efficient as advertised (~65%)

and variation

Independence from the grid

+ Environmental benefits

OR + DIY install

Improvement: Fits with the house

Capitalises into house value

Improves ventilation

Is safe

The consistency in what people care about raises another question:

how much do householders vary in their

willingness to make trade-offs

among the aspects they care most about?

we investigated this question with a survey that asks them to make a series of hypothetical, but realistic, trade-offs

Which heating system do you prefer?

One that… Or one that…

disturbs your neighbours disturbs your neighbours

somewhat due to noise or smoke not at all

depends on energy from the grid depends on energy from the grid

not at all totally

assuming all other aspects of the heating systems are the same

Here’s an example of a trade-off question

Who participated?

Households were recruited nationally

by a market research firm that recruits participants through a loyalty

program

survey respondents earn “reward points”

database consists of about 90,000 email addresses

We targeted home owners (with or without mortgage)

with a demographic profile similar to NZ’s

22% response rate, or 810 responses

Again, a good range of observable characteristics

Geographic distribution is closely representative

Household characteristics Sample Population

1 person 9.2% 22.6%

2 person 38.5% 25.2%

3 – 5 person 47.4% 27.0%

Age > 65 17.0% 16.4%

Age 30 – 64 74.5% 56.9%

Med HH income 70 – 80k 60 – 70k

Paying mortgage 67.9% 54.9%

House built before 1978 52.6%

Space heating

Wood burner 28.5%

Heat pump 28.3%

Portable/fixed gas 13.9%

Portable electric 12.3%

Central heating 2.5%

Relative strength of preference

Low upfront cost 17

Low running cost 14

Capitalises into house value 8

Works as advertised 11

Easy to operate 8

Fits with house 13

Disturbs neighbours 10

Disturbs householders 11

Independent of the grid 8

What did we find?

Relative strength of preference

Low upfront cost 17

Low running cost 14

Capitalises into house value 8

Relative strength of preference

Low upfront cost 17

Low running cost 14

Capitalises into house value 8

Works as advertised 11

Easy to operate 8

Fits with house 13

Disturbs neighbours 10

Disturbs householders 11

Independent of the grid 8

Sample average results

Average Min Max

Low upfront cost 17 4 49

Low running cost 14 3 37

Capitalises into house value 8 1 32

Works as advertised 11 1 29

Easy to operate 8 2 29

Fits with house 13 1 33

Doesn’t disturb neighbours 10 1 30

Doesn’t disturb householders 11 1 30

Independent of the grid 8 1 32

A lot of variation across householders

Cost

Constrained

Low upfront cost 34

Low running cost 16

Capitalises into sale price 3

Works as advertised 10

Easy to operate 7

Fits with house 12

Doesn’t disturb neighbors 5

Doesn’t disturb household 7

Independent of grid 6

% of participants 13%

Cost

Constrained Practical

Low upfront cost 34 10

Low running cost 16 18

Capitalizes into sale price 3 7

Works as advertised 10 13

Easy to operate 7 13

Fits with house 12 15

Doesn’t disturb neighbors 5 8

Doesn’t disturb household 7 9

Independent of grid 6 7

% of participants 13% 23%

Constrained Practical Investor

Low upfront cost 34 10 18

Low running cost 16 18 16

Capitalises into sale price 3 7 16

Works as advertised 10 13 10

Easy to operate 7 13 6

Fits with house 12 15 11

Doesn’t disturb neighbors 5 8 7

Doesn’t disturb household 7 9 10

Independent of grid 6 7 6

% of participants 13% 23% 17%

Constrained Practical Investor Considerate

Low upfront cost 34 10 18 18

Low running cost 16 18 16 10

Capitalizes into sale price 3 7 16 6

Works as advertised 10 13 10 11

Easy to operate 7 13 6 7

Fits with house 12 15 11 13

Doesn’t disturb neighbors 5 8 7 15

Doesn’t disturb household 7 9 10 16

Independent of grid 6 7 6 4

% of participants 13% 23% 17% 19%

Constrained Practical Investor Considerate Independent

Low upfront cost 34 10 18 18 15

Low running cost 16 18 16 10 12

Capitalizes into sale price 3 7 16 6 8

Works as advertised 10 13 10 11 9

Easy to operate 7 13 6 7 5

Fits with house 12 15 11 13 13

Disturbs neighbors 5 8 7 15 11

Disturbs household 7 9 10 16 11

Independent of grid 6 7 6 4 15

% of participants 13% 23% 17% 19% 28%

What does this imply for “helping people choose”

Cost-constrained group

aided by financial assistance

Practical group

benefit from independent testing and certification

Investor group

inspection and certification of the installation

Considerate group

aided by requirements for labelling of noise, emissions

Independent group

aided by technical information and innovation

To sum up…

There’s a great deal of variation out there

it’s glorious!

But it’s costly

retrofitting older houses is costly,

but so is the process of making good choices

which retrofits work best in our context?

which should we do first?

Helping households take the financial plunge is important

and so is helping them choose well

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