WP-031: Kevin Novan, Aaron Smith, and Tianxia Zhou, "Residential Building Codes Do Save Energy: Evidence From Hourly Smart-Meter Data" (June 2017)
In 1978, California adopted building codes designed to reduce the energy used for heating and cooling. Using a rich dataset of hourly electricity consumption for 158,112 California houses, we estimate that the average house built just after 1978 uses 13% less electricity for cooling than a similar house built just before 1978. Comparing the estimated savings to the policy's projected cost, we conclude that the policy comfortably passes a cost-benefit test. In settings where market failures prevent energy costs from being completely passed through to home prices, building codes can serve as a cost-effective tool for improving residential energy efficiency.