Do Household Time, Risk, and Social Preferences Affect Home Energy Retrofit Decisions in Korea?

Abstract

Paying attention to impacts of behavioral factor on energy efficiency (EE) investments, this study attempts to identify preference characteristics affecting EE investments. We model households' EE investments with time, risk, and social preferences, conduct a survey, and empirically examine the effects of the preference characteristics on home energy retrofit decisions in Korea. We find that the research hypotheses for risk and social preferences that we are derived from the model are supported while those for time preference are partially supported. The results are summarized as follows. First, respondents who discount the future more heavily are less likely to plan a home energy retrofit. Second, very risk-averse respondents are less likely to have experienced a home energy retrofit and very risk-seeking ones are more likely to plan a home energy retrofit. Third, those seriously concerned about environmental issues or who strongly respond to moral norms are likely to have experienced or plan a home energy retrofit.