Green Neighbors, Greener Neighborhoods: Peer Effects in Green Home Investments

Abstract

Utilizing a nearest-neighbor research design, I find that households exposed to green neighbors within 0.1 miles are 1.6 times more likely to make their homes green within a year than unexposed households. The exposure also increases the likelihood of multi-property owners certifying their faraway secondary prop- erties green, emphasizing that information from neighbors, not neighborhood characteristics alone, drives the effect. While financial benefits including green homeprices,electricitysavings,andregulatoryincentivesstrengthenpeereffects, pro-environmentalpreferencesdonot. Aninformation-cost-baseddiscretechoice modelexplainsthefindingsandsuggeststhatincorporatingpeereffectmetricsin subsidiesmayaccelerategreenhomeinvestments.

Keywords

Tags of Social Finance