Presented By: Department of Economics
Homework in Climate Economics: Household Production, Environmental Preferences, and Climate Policy (with Hannah Rhodenhiser and David Lagakos)
Stephie Fried, Federal Reserve Bank of San Francisco
This paper studies emissions from household energy use, which account for one third of U.S. emissions. We draw on a new survey to document that some households purchase energy-saving equipment because, in addition to cutting energy costs, they want to reduce emissions. We build a macro-environmental model in which emissions result from home production tasks involving either clean or dirty equipment, and some households have distaste for their own emissions. We analyze the most cost-effective subsidy on clean equipment. We show that changes in households' emissions distaste have similar effects on household emissions as a modest sized carbon tax.