Heterogeneous split-incentive effects by heating system: evidence from Turkey

Official URL: https://dx.doi.org/10.1016/j.enbuild.2026.116946

Investments in residential energy efficiency are crucial for reducing energy demand, yet the landlord–tenant “split incentive” can impede upgrades. Because tenants typically pay energy bills, landlords may under-invest, creating an efficiency gap in rental markets. Effective mitigation requires identifying where this friction is strongest. Using nationally representative Turkish micro-data (2002–2019), we employ Ordinary Least Squares (OLS) and Propensity Score Matching (PSM) to examine how tenure relates to household energy expenditure and how this relationship varies by heating technology and building age. Tenants, on average, spend about 1% more than comparable owners with similar characteristics; this gap is substantially larger for tenants using stoves and individual boilers– 3.0% and 3.4%, respectively. The difference is smaller for centrally heated buildings and more pronounced in older dwellings (pre-2000), where the gap ranges from 3.6% to 10.5%. Estimates rely on rich housing and household controls, with PSM as a complementary check. Overall, the evidence indicates that split-incentive frictions are most salient where legacy systems persist, suggesting that information disclosure and retrofit support targeted at rental units with traditional heating systems or older rental homes can yield more effective reductions in energy demand.