AN ECONOMETRIC-ANALYSIS OF RESIDENTIAL EXPENDITURES ON ENERGY-CONSERVATION AND RENEWABLE ENERGY-SOURCES

Economic theory suggests that residential expenditures on energy conse rvation and renewable energy sources will be determined by the ability of households to purchase conservation inputs, their incentive to inv est in conserving energy, the energy efficiency of existing homes and miscellaneous factors such as climate and age of the home-owner. Empir ical analyses of energy-related expenditures reported on individual in come tax returns confirm the importance of household income, energy pr ice increases and climate conditions in determining energy conservatio n investments. Income tax credits are also found to have stimulated re sidential spending on conservation and renewable energy.