How Can We Encourage Private Households to Install Photovoltaic Systems?

While the environmental benefits of installing photovoltaic systems are clear, the costs can remain off-putting for private households. In this video, I explore the relevance of the peer effect (neighbors already having the technology) in a decision to install a photovoltaic system. Establishing an installed base and considering fixed effects alongside an instrumental variable approach, Johannes Rode (main author) and I find that peer effects are most prominent on a very local level i.e. within a distance of 100m. We also show that the visibility of an existing photovoltaic system plays a vital role in its potential influence in the neighborhood.