Real Estate & Planning Research Seminar by Dr Rodolfo Sejas-Portillo from the London School of Economics. Title " The effect of weather on the willingness to pay for residential energy-efficiency"

This is an internal seminar and attendees should use their University email account to join the meeting if they are joining via MS Teams. You are welcome to share this invite internally but please do not share it beyond the University. Please direct any enquiries from those outside of the University to: repschooloffice@reading.ac.uk.

Rodolfo will be presenting in person, and we would like to encourage you all to attend in-person, although the Seminar will also be available on MS Teams.

Short bio: Dr Rodolfo Sejas-Portillo is a Fellow in Real Estate Economics and Finance at the London School of Economics and Political Science (LSE). His research studies psychological (behavioural) biases in housing markets and more broadly the effects of information disclosure policies. He is also interested in the relationship between real estate markets and wealth redistribution and the redistributional effects of behavioural public policies.

Abstract: I study the effects of weather conditions on the economic valuation of energy-efficiency (EE) in the UK housing market. The benefits of EE features depend directly on the expected weather over the ownership time frame (e.g. insulation for maintaining heat during cold periods). However, due to its notorious unpredictability, current weather conditions provide little to no additional information about future weather conditions (beyond common knowledge such as seasonal temperatures). Using transaction-level data of over 5 million residential property sales in England and Wales, I find that weather conditions on the month the buying decision is made can disproportionately influence the EE valuation of properties: During rough weather (i.e. cold and rainy) the EE rating of a property has a stronger influence on its sale price than during favourable weather (i.e. warm and dry). I show that these results are unlikely to be driven by energy-cost optimisation or self-selection behaviour. The consistency of the results with intuitive predictions (in the UK the benefits of EE are much higher during rough weather) highlights their importance: People understand the benefits of EE yet make biased intertemporal valuations. I model and discuss psychological biases as the most likely mechanisms and find that salience appears to have the stronger effect. I also present a novel extension to the regression-kink design (RDK) for identifying and estimating the treatment effect when the running variable also moderates the effect of another variable (via interaction). I conclude with policy recommendation.

Working paper (please include this link in the invite): http://eprints.lse.ac.uk/119358/1/Paper_42_Sejas_Portillo.pdf