2 Veni Grants for SBE Academics: Impacts of Housing Policy and Pricing

The Dutch Research Council (NWO) recently awarded their prestigious Veni funding to 188 promising researchers (out of 1462 applicants) in the Netherlands. SBE academics Juan Palacios and Max Löffler were among the 188 laureates who each received up to €280,000 in funding which they will use to develop their ideas in the coming three years. 

Juan and Max both happened to submit projects regarding the effects of housing policies and pricing on society. In this article, you will find a more detailed description of each project.

The Societal Impact of Decarbonizing the Housing Market - Juan Palacios

Juan Palacios, Assistant Professor at SBE and visiting Assistant Professor at MIT

The housing market is experiencing a rapid transformation, whereby millions of dwellings across the European Union and the US are renovated through energy retrofits. This transformation is in response to both (inter)national emission-reduction goals and record-high energy prices. However, Juan Palacios believes that we are currently neglecting the human part of the energy transition: "We spend 90% of our time indoors, and most of that time is spent at home. The major renovations that are ongoing in the housing sector are introducing changes in the environment of millions of households". 

While the retrofit wave focuses on reducing greenhouse emissions in the region, there is limited knowledge of the effect of home energy retrofits on the health and socio-economic outcomes of individuals living in renovated homes. This knowledge gap prevents policymakers and other stakeholders from adequately evaluating the broader societal implications of energy retrofits beyond reductions in greenhouse emissions, hindering optimal investment by the public and private sectors.

With this project, Juan Palacios aims to uncover the following:

  1. Provide evidence on how home energy retrofits affect energy poverty and other socio-economic factors.
  2. Understand the impact of home energy retrofits on the health outcomes of individuals in the years following renovation.
  3. Consider the long-term consequences of energy retrofits on health and human-capital accumulation of individuals exposed to home renovations during their childhood.

“ I will use my NWO Veni grant to provide the first evidence on how these investments can improve the life of households." - Juan Palacios

Institutional Housing is the Key

Institutional housing portfolios offer the perfect setting to explore the impact of home energy retrofits on occupants, because individuals are allocated to dwellings via lotteries or waiting lists, and the timing and type of retrofits in dwellings are decided as part of a corporate strategy rather than individual decisions of occupants. This setting will allow for robust and large-scale estimates of the societal impact of home renovations, independent of individual preferences or existing socio-economic conditions.

Housing Markets and Inequality - Max Löffler

Max Loffler
Max Löffler, Assistant Professor at SBE and Affiliate at the CESifo Research Network, IZA, and ZEW

Many places around the world have experienced tremendous increases in housing costs in the past decade. Average Dutch house prices increased by around 50%, prices in London by 70%, and in Berlin by more than 90%. At the same time, incomes have not kept up with the rising prices.

It is no surprise that the affordable housing crisis is recognised as one of the most pressing public policy issues in recent years by policymakers. The negative consequences of increasing house prices are often highlighted in popular media: A shortage of affordable housing for average-income households, middle-class families struggling to build up wealth through homeownership, and the “displacement” of poorer long-term residents out of their neighbourhoods, which further increases the residential segregation of cities by socio-economic status. 

“Most of my work has been motivated by my obsession to get a better understanding of inequality in society.” – Max Löffler

With this project, Max aims to analyse the impact of rapidly increasing house prices on inequality and segregation and to evaluate the pros and cons of recently implemented policy reforms. 

It’s a Question of Data

Currently, there is a lack of systematic evidence regarding how house price booms affect economic inequality and city segregation, beyond what we see in the news. Additionally, there is limited causal evidence on the effectiveness of measures taken to address the housing crisis. However, this evidence would be key to designing sound policies attenuating the surge of housing expenditures.

Max believes it to be an empirical question; We need more data. For policymakers, the affordable housing crisis creates a challenge and we know very little about the (de)merits of potential policy measures. Max hopes to document the impact on inequality and identify the effects of housing market policies to inform policymakers.

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