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Impact of home energy efficiency labeling program on housing decisions in South Korea: A choice experiment approach

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Abstract

The South Korean government has been providing information on home energy efficiency since 2001 in order to incentivize improvements in the energy efficiency of both existing and new buildings. Whether such information provision delivers the intended outcomes hinges on consumers’ preferences for home energy efficiency in the real estate market. This study investigates South Korean consumers’ preferences for home energy efficiency in the real estate market by applying a choice experiment approach. Using a conditional logit model and a latent class model, this study concludes that less than 20% of Korean consumers consider home energy efficiency as a significant factor in their housing decisions and identifies the sources of taste variations in Korean consumers’ preferences for home energy efficiency. The findings of this study imply that the current information programs on home energy efficiency in South Korea should be much improved to achieve its goal.

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Notes

  1. The sample is recruited from the online panel collected by Gallup Korea.

  2. We organized a panel of six experts in the areas of architectural engineering, building energy efficiency, energy policy and survey. We were advised on designing the survey and interpreting the results from this panel. We gathered opinions via telephone interviews and face-to-face interviews.

  3. The number of attributes should be no more than six because as it increases, the trade-offs therein become difficult to understand for the respondents (Phelps et al. 1978) and the minimum required sample size increases exponentially (Bateman et al. 2002).

  4. The exclusion of the physical characteristics affecting home energy efficiency help to deal with the problem that the better these physical characteristics, the better the home energy efficiency. Instead of excluding them, the respondents are briefly informed of the relationship between home energy efficiency and the physical attributes.

  5. In our study, the unit size is defined as “pyeong,” which is the identical unit of housing size in Korea. 1 pyeong equals to 3.3 m2.

  6. “Because of the need to evaluate multiple integrals of the normal distribution, the probit model has found rather limited use in this setting.” (Greene 2008, p. 842).

  7. The individual characteristics are prepared by the reviewing the responses to the questions in the first and third parts of the questionnaire.

  8. The specification of logit model (2) shown in Eq. (12) has the greatest value of log-likelihood among a variety of specifications that yield consistent results with those of previous studies as well as with common sense.

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Acknowledgements

This paper is partly based on the KEEI Research Paper No. 14–11 (“Korean Publics’ Perceptions on Energy Performance of Multi-Unit Dwellings”), which was supported by the Korea Energy Economics Institute (KEEI) grant. Any errors are the authors’.

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  1. Climate Policy Research Team, Korea Energy Economics Institute, 405-11 Jongga-ro, Jung-gu, Ulsan, 44543, Korea

    Jihyo Kim

  2. Department of Economics, Pukyong National University, 45 Yongso-ro, Nam-gu, Busan, 48513, Korea

    Jiwoong Lee

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Kim, J., Lee, J. Impact of home energy efficiency labeling program on housing decisions in South Korea: A choice experiment approach. J Hous and the Built Environ 37, 483–504 (2022). https://doi.org/10.1007/s10901-021-09854-9

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