Peer Effects and Inequalities in Technology Uptake. Evidence from a Large-Scale Renovation Subsidy Programme

Talk by Jakub Sokolowski (IBS Warsaw) as part of the Research Seminar Series of the IOS Economics Department.

We study the relationship between peer effects, economic inequality, and technology adoption within the context of energy transition. We explore how socioeconomic disparities influence the uptake of renewable heating sources, leveraging unpublished microdata from the Clean Air Priority Programme in Poland based on over 260,000 applications. Our analysis shows that peer effects accelerate technology uptake, with each additional installation increasing the likelihood of subsequent adoption by 0.014 pp. However, the effectiveness of peer influences is affected by economic inequality. In more economically homogeneous areas, affluent individuals considerably impact their peers' decisions to adopt new technologies. In areas with higher economic disparities, this influence diminishes. Furthermore, peer effects are more pronounced within the same income groups, and the cross-income influence is limited. Our findings also reveal that the type of heating technology and the income level of the adopter play crucial roles in the magnitude of the peer effect. Heat pump adopters emerge as a significant driver of peer influence, especially in regions with lower income inequality. Therefore, we argue that addressing economic inequalities through progressive public policies will foster a just transition in the residential energy sector.