Identifying Free-riding in Home Renovation Programs Using Revealed Preference Data
Identifying free-ridership is significant to several issues relevant to program evaluation, includ-ing the calculation of net program benefits and assessments of political acceptability. Despitethe potential of free-ridership to seriously undermine the economic efficiency of a programintervention, for instance to foster energy efficiency, the issue remains largely absent from con-temporary environmental and energy policy discussions in Europe. One reason for this neglectis the inherent difficulty of assessing which households would have undertaken the energy-conservation activity even without the program. This paper proposes a procedure to calculatethe free-rider share using revealed preference data on home renovations from Germany’sresidential sector. We employ a discrete-choice model to analyze the effect of grants on renova-tion choices, the output from which is used to assess the extent of free-ridership under a subsidyprogram very akin to an implemented grants program in Germany. Our empirical resultssuggest only very moderate energy savings induced by the program, making free-riding aproblem of outstanding importance.
Grösche, P., C. Schmidt und C. Vance Ph.D. (2013), Identifying Free-riding in Home Renovation Programs Using Revealed Preference Data. Jahrbücher für Nationalökonomie und Statistik, 233, 5-6, 600-618