Household preferences for private versus public subsidies for new heating systems: insights from a multi-country discrete choice experiment

Abstract

ABSTRACT This paper employs demographically representative discrete choice experiments (DCEs) with owner occupiers in Poland, Sweden, and the United Kingdom (UK) to estimate the effects of subsidies, heating cost savings, installation time (reflecting ‘hassle costs’) and warranty length on owner occupiersʻ propensity to invest in a new heating system. In particular, the paper explores whether owner occupiers value subsidies received from public funding sources differently than subsidies received from private funding sources. The results from estimating mixed logit models suggest that respondents not only value subsidies for new heating systems because they decrease the net price, but they also value receiving a subsidy per se. For participants from Sweden (but not from Poland and the UK), this non-monetary value was found to be higher for subsidies offered by a public than by a private funding source. The results for heating cost savings in the three countries imply implicit discount rates between about 11 and 13%. We further find that respondents in Poland dislike longer installation times, and that respondents in all three countries value longer warranty times.