Monday, July 30, 2012

Do Environmentalists Own Swimming Pools?

I skim Joe Romm's blog because it offers some substance and it provides a sense of how "climate hawks" are attempting to attract attention for their cause.   His team blogged about a recent paper of mine without mentioning me or Nils Kok.

This recent blog post caught my eye. It claims that people who live in homes where there is a swimming pool consume 49% more electricity than those who don't.  It makes the nice point that this is likely to be a selection effect rather than a treatment effect and it establishes this point by looking at the differential in average consumption between "pool homes" and homes without pools by looking off-season at spring and fall and showing that this differential persists.

So, who self-selects to live in a home with a private swimming pool?  It could be a standard demographic story of households with more kids and more income gaining pleasure from having a pool and they consume more electricity.

What about environmental ideology?   Are Republicans more likely to live in homes with pools?  To study this, I took the data that Nils Kok and I used for our "green homes" paper  and merged it by street address to Aristotle data.  The Aristotle data provides information for home owners on their age and in California on their political party of registration.  Using this merged data set for recent home sales in Placer County, California, I ran the following regression.

areg Pool  Rep age, absorb(zip)

Linear regression, absorbing indicators                Number of obs =   13145
                                                       F(  2, 13118) =   12.74
                                                       Prob > F      =  0.0000
                                                       R-squared     =  0.0918
                                                       Adj R-squared =  0.0900
                                                       Root MSE      =  .35199

        Pool |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
         Rep |   .0196991   .0061828     3.19   0.001     .0075799    .0318182
         age |  -.0008377   .0002082    -4.02   0.000    -.0012459   -.0004296
       _cons |   .1930868   .0108083    17.86   0.000      .171901    .2142727
         zip |      F(24, 13118) =     53.221   0.000          (25 categories)

So, for 13,145 homes in Placer County --- I ask the following question ---- within a given zip code (note the zip code fixed effects);   who owns a home with a Pool?  According to this linear probability model, older people are less likely to own a pool.   Note the dummy variable "Rep" . This is a dummy that equals one if the head of household is a registered Republican and equals zero otherwise.  All else equal, Republicans are 2 percentage points more likely to own a pool.  The Pool ownership rate in this sample is 16% so this is moderate effect but it highlights that a type of ideological sorting is taking place.

What about "square footage" of the house?  Again, note that I"m comparing people who live in the same zip code so this is comparing people with roughly similar incomes.  The Republicans on average, live in homes that are 146 feet larger (see below) in Placer County.

 areg SA_SQFT  Rep age, absorb(zip)

Linear regression, absorbing indicators                Number of obs =   13143
                                                       F(  2, 13116) =   54.85
                                                       Prob > F      =  0.0000
                                                       R-squared     =  0.1452
                                                       Adj R-squared =  0.1435
                                                       Root MSE      =  909.08

     SA_SQFT |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
         Rep |   146.5746    15.9695     9.18   0.000     115.2721    177.8772
         age |  -2.882094   .5377636    -5.36   0.000    -3.936189   -1.827999
       _cons |   2372.058   27.91508    84.97   0.000      2317.34    2426.775
         zip |      F(24, 13116) =     86.957   0.000          (25 categories)

The Big House with the Pool is part of the American Dream.  Does that attract you?  The liberals of Berkeley are likely to say "no thanks" while some in Texas would say; "hell yeah!".  When consumption offers private benefits but imposes social costs, who gorges versus who engages in voluntary restraint?

So, my point is that while standard demographics matter in explaining consumer choices that have implications for electricity consumption and co2 production.  Political party identification and environmental ideology also matter.  This point will be at the heart of the revised paper I present at the John Quigley Lincoln Institute Conference in October 2012.

Understanding differences in lifestyle choices between people as a function of ideology will become a more important subject at the intersection of economics, sociology and political science.  Such consumption differences (do you live in a Houston McMansion?) then affect voting behavior as self interested individuals are aware of the price they will pay for a real carbon tax.