Folks are illogical. Including me. I think a fizzy drink should cost about $1 and don’t want to pay more—but $5 for a coffee is alright. Weird.
Well it turns out we do the same sort of allocation of money even when we can (or can’t) afford to spend more. An excellent example is that folks spend what they think they should on utilities. Even when they are rich. So their homes, when built to the current New Zealand Building Code, are generally horribly cold.
This graph comes from an intriguing post by Germán Molina on his Buildings for People blog:
The bottom line is, unless homes are very efficient, folks spend the same amount on heating and enjoy being warmer (and very likely, healthier). But there’s no energy saving. If we want to reduce energy use in buildings, we need to aim for Passive House or very close to it.
Take as an example the Warm Up New Zealand: Heat Smart project. EECA calculated the energy savings were near zero. Research was conducted to explain this and it showed people spent the same amount of money and enjoyed being warmer. They also became healthier: every $1 spent on insulation saved more than $3 on healthcare costs. See Grimes, A. et al “Cost Benefit Analysis of the Warm Up New Zealand: Heat Smart Programme,” June 2012.
From that paper:
“The results are dominated by the health benefits, which represent approximately 99% of the total benefits. There are additional benefits that we have not been able to include in our analysis, eg. comfort benefits associated with additional interior warmth, and savings in other fuels that we have not measured (changes in consumption of coal, wood and LPG). On the basis of the analysis in this study, we conclude that the dominant benefits (gross and net) of the programme are attributable to the insulation component of the scheme. We are unable to conclude whether there are net benefits or net costs associated with the inclusion of clean heating in the programme, but it is reasonable to conclude that the (positive or negative) net benefits of this component are small by comparison to those for insulation. …The central estimate of gross benefits for the programme is $1.28 billion compared with resource costs of $0.33 billion”.