Split Incentive Problem
A market failure where the person who pays for an energy upgrade (landlord) is not the person who benefits from lower energy bills (tenant), or vice versa, discouraging investment.
Why It Matters
The split incentive explains why rental properties are often less efficient. Green lease clauses and on-bill programs are emerging solutions.
Related Terms
Energy Burden
The percentage of household income spent on home energy costs. The median U.S. household spends about 3%, while low-income households often spend 8-20%.
Energy Poverty
A condition where households spend more than 6-10% of income on energy bills (vs the national average of ~3%). Disproportionately affects low-income, elderly, and minority communities.
On-Bill Financing
A loan program where energy efficiency or solar upgrades are repaid through a line item on your monthly utility bill, often with no upfront cost and favorable interest rates.