College of Agriculture & Natural Resources
Agricultural & Resource Economics

Seminar: Should Home Sellers be Required to Audit and Disclose Residential Energy Efficiency? - Erica Myers - UIUC

Event Series: 
Wednesday, Sep. 4, 3:30pm
Add to Calendar
3121 Symons Hall
Event Type: 
Erica Myers - UIUC


Mandatory information disclosure is a key regulatory instrument in major sectors including health care, education and finance despite scant empirical evidence supporting the economic efficiency of such requirements. Our study identifies a rare context of a government disclosure program that has demonstrable socially beneficial effects. Using similar nearby homes to form a counterfactual, we show that requiring homeowners to provide potential buyers with certified energy audits increases price capitalization of energy efficiency and leads to welfare-improving residential efficiency improvements. Moreover, we present evidence consistent with this setting having symmetrically incomplete information -- uninformed buyers and uninformed sellers -- as the likely market failure which is corrected by government intervention. More generally, we formalize and provide empirical support for seller ignorance as a motivation for mandatory information disclosure and justification for similar policies in settings where both buyers and sellers may imperfectly observe transacted product quality.

Maintained by the IET Department of the College of Agriculture and Natural Resources. © 2019. Web Accessibility