Director of Economic Analysis Program, Bureau of Economic and Business Research (BEBR), 2015 - Present
University of Florida
PhD in Economics, UW-Madison, 2015
Research areas: Applied Microeconomics, Energy/Environmental Economics, Consumer Sentiment, Social Interactions, Peer Effects, Education, and Program Evaluation
E-mail: hsandoval@ufl.edu

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Refereed Publications

1. Split Incentives in Emerging Countries with Pedro Hancevic. The Energy Journal, 45(4), 2024

   Abstract: In this paper, we provide empirical evidence of the energy-efficiency gap between homeowners and renters and quantify the magnitude of the split incentives problem in an emerging economy by studying Mexican households. Using micro-level data from the first National Survey on Energy Consumption in Private Homes (ENCEVI-2018) and a regression framework, we show that underinvestment problems occur in multiple categories of residential energy efficiency. Concretely, our results show that renters have significantly less insulation and energy-efficient equipment, that they tend to use some of their equipment more frequently, and that they pay higher utility bills than homeowners. In addition, renters are less aware of government programs that can reduce their energy expenditure and are also less likely to take advantage of them. Finally, a substantial reduction in carbon emissions could be achieved if renters were equally energy efficient as homeowners.

2. Gender Gap in Consumer Expectations. Applied Economics Letters, 2024

   Abstract: This paper provides empirical evidence of the persistence of gender gaps in consumer expectations regarding personal finances and the national economy's performance. Using individual-level data from two independent but comparable consumer attitude surveys --one nationally representative of the U.S. and the other statewide representative of Florida-- it demonstrates that women are significantly less likely than men to hold optimistic expectations about their personal financial situation and U.S. business conditions over the next year and the next five years. These gender expectation gaps, ranging from 5 to 8.5 percentage points, remain highly significant even after controlling for respondents' socio-demographic characteristics, as well as survey-month and geographic location (including zip code) fixed effects. Furthermore, these gaps are prevalent in both surveys and have been present for more than four decades. Although persistent over time, these gender differences tend to narrow during periods of economic hardship and widen during economic expansions.

3. Sentiments and Spending Intentions: Evidence from Florida with Anita Walsh. Economic Inquiry, 62(3), 2024

   Abstract: Consumer sentiment is considered an important leading indicator of changes in household spending. However, the overall empirical evidence of the causal relationship between sentiment and consumption is mixed and scarce. We address these gaps by employing data from the monthly Florida Consumer Attitude Survey, which captures party affiliation, consumer sentiment, and spending intentions at the individual level since 1991. We employ political partisanship around elections in which the governing party changed as an instrument for sentiment. Our results show that party affiliation is a strong instrument that has a positive and statistically significant effect on sentiment. Moreover, we find a statistically significant causal relationship between sentiment and spending intentions. This effect is sizable and robust across the presidential elections in our sample as well as to a variety of robustness checks. Finally, we provide evidence that spending intentions relate to actual spending, and show that spending increased more among counties with a larger share of Republican voters following the 2016 presidential election.

   Media attention: Wiley Research Headlines | UF CLAS News | The Guardian | Wall Street Journal (WSJ) | WSJ (2)

4. Solar Panel Adoption among Mexican Small and Medium-Sized Commercial and Service Businesses with Pedro Hancevic. Energy Economics, Vol 126, 106979, 2023

   Abstract: We analyze the determinants of adoption of distributed solar photovoltaic systems, focusing on small and medium-sized commercial and service firms. We use monthly billing data that are perfectly matched with data from a novel survey that gathers information on electricity consumption, stock of electric equipment, and a rich set of firm characteristics in the Metropolitan Area of Aguascalientes, Mexico. Using an econometric model, we find evidence that a set of explanatory variables such as business characteristics, the economic sector, ownership status, stock and usage of equipment and appliances, presence of other solar technologies, and views about the use of renewable energy are important determinants of the probability of adoption of solar panel systems. Furthermore, using machine learning methods to identify the best predictors of solar adoption, we indirectly validate the theory-driven empirical model by assessing a large set of explanatory variables and selecting a subset of these variables. In addition, we investigate relevant cases where a priori solar panel adoption seems to be cost-effective but structural adoption barriers and adoption gaps might coexist for certain groups of electricity users. We also calculate the social cost savings and the avoided CO₂ emissions. Finally, based on our results, we provide several policy implications and recommendations.

5. Differential Impact of COVID-19 on the Energy Consumption of Residential and Business Sectors with Pedro Hancevic. Economics of Energy & Environmental Policy, 12(1), 2023.

   Abstract: As a consequence of the COVID-19 pandemic, some patterns of energy consumption changed in the residential and non-residential sectors. This paper uses data from a local utility company in Florida to quantify the heterogeneous impacts of the pandemic on electricity and natural gas consumption across households from different income levels and across essential and non-essential businesses. We found significant increases in the average residential electricity consumption during the lockdown and subsequent reopening phases, which translate into higher cost for households. We found that natural gas consumption dropped abruptly in the business sector and also important differences between the electricity consumption of essential and non-essential businesses, with the former consuming more and the latter less electricity.

6. The Impacts of Fare-Free Bus Programs on Educational Outcomes of K-12 Students with Emanuel Garcia Munoz. Journal of Human Capital, 16(4), 2022.

   Abstract: With the increasing difficulty in providing student transportation, school districts have increased their collaboration with public transit providers to offer access to public transportation through free or reduced-fare programs. One such program was implemented in Florida, allowing any K-12 student in Leon County to ride the bus for free at any time to any destination. This paper applies the synthetic control method to estimate the impact of this program on school attendance and chronic absenteeism. Surprisingly, our results show negative impacts on both attendance and absenteeism outcomes, highlighting the potential unintended consequences of programs with no restriction on student ridership.

7. Low Income Energy Efficiency Programs and Energy Consumption with Pedro Hancevic. Journal of Environmental Economics and Management, Vol 113, 102656, 2022

   Abstract: Low-income energy efficiency programs have become a major component of cities' energy policy, with 49 out of 51 largest metropolitan areas in the U.S. offering one. This paper uses data from Gainesville Regional Utility to quantify the impacts of the housing investment done by its Low-income Energy Efficiency Program Plus (LEEP Plus) on energy consumption. Our results show that LEEP Plus does not affect natural gas consumption but reduces electricity consumption by approximately 7%, with greater savings occurring in the summer and winter. The effect on electricity consumption is significant to a variety of robustness checks and remains for at least 24 months after the completion of energy efficiency upgrades. We also measure some relevant heterogeneous effects, one of which is the breakdown of the air-conditioning-related investments, the main energy efficiency improvement under the LEEP Plus program. Finally, we evaluate the energy savings in monetary terms considering the private cost changes and the social cost changes. In both cases, the associated energy savings are not enough to offset the investment costs.

8. The Role of Consumer Confidence in Forecasting Consumption, Evidence from Florida with Anita Walsh. Southern Economic Journal, 88(2): 757-788, 2021

   Abstract: Consumers’ attitudes about the direction of the economy influence their decisions about discretionary purchases, saving, and investment. This paper uses data from Florida’s consumer sentiment index to study the role and accuracy of consumer confidence in forecasting consumption, as well as the mechanism behind such a relationship. Spending on durable goods tends to be more discretionary in nature and it is frequently done using credit, thus potentially more sensitive to changes in consumer attitudes. Our results indicate that the in-sample predictive power of the index and its questions is limited to predicting spending on durable goods, particularly, on autos. Furthermore, consumer confidence does not improve the out-of-sample forecast beyond the forecast from a baseline model, which considers economic fundamentals. Finally, the evidence shows that the relationship between shocks in consumer confidence and economic activity arises because confidence measures contain information about the state of the economy, thus rejecting animal spirits.

9. Social Capital in Labor Market Access and Poverty in Mexico with Martin Lima. Well-being and Social Policy, 9(1): 49-71, 2014

   Abstract: Social capital, defined as the set of social networks that a person has in order to obtain benefits, is used by the population as a mechanism for providing resources, to cushion shocks in consumption and to obtain information on available employment opportunities. This study employs a logistic model to characterize the manner in which people access the labor market in Mexico through the use of their social networks (bonding social capital). It also takes poverty levels into account. A cycle in the use of social networks was observed in which job searches are initially conducted with the help of family, then friends and co-workers, and, lastly, neighbors. This cycle is robust in the case of the poor, who rely primarily on friends and co-workers to enter the labor market.

10. Negative Net Incomes and the Measurement of Poverty: A Note with Carlos Urzúa. Journal of Management, Finance, and Economics, 3(1): 29-36, 2009

    Abstract: This note warns about the careless computation of poverty indexes when the welfare of each household is measured by its net income, since this can be negative. As is illustrated in the case of Mexico, even if only a handful of households report negative incomes, the resulting poverty aggregates, when they go beyond a mere headcount measure, can behave rather badly. The note ends with suggestions on how to deal with the problem.

11. TIPs for the Analysis of Poverty in Mexico, 1992-2005 with Carlos Urzúa and Alejandra Macías. Journal of Management, Finance, and Economics, 2(1): 74-91, 2008

    Abstract: This paper proposes some changes to the official methodology that is currently in use to measure the state of poverty in Mexico. Among other suggestions, it is recommended the use of bootstrapping to estimate confidence intervals for the poverty statistics, as well as the use of dominance analysis when making intertemporal comparisons. In particular, since poverty lines change over time, the paper proposes the use of TIP curves for that end. Using the eight surveys that were made during the period 1992-2005, the paper presents a large number of absolute poverty statistics and TIP curves, as well as comparisons among them.

Research Grants

1. Climate and Sustainable Development (CSD) Sector of the Inter-American Development Bank (IDB), Energy Efficiency Audits for Small Firms in Mexico with Hernán Bejarano and Pedro Hancevic, $65,000, 2022-2023.

Working Papers

1. Opportunistic Behavior and Discrimination in the Mexican Solar PV Market: An Audit Experiment with Hernán Bejarano and Pedro Hancevic (under review)

   Abstract: We conducted an audit experiment in which fictional households requested quotes for the purchase, installation, and interconnection of solar photovoltaic systems in four cities across Mexico. This allowed us to identify whether there was opportunistic behavior among local sellers and to quantify the extent of discrimination based on characteristics of residential users, such as gender, socioeconomic status, product knowledge, and access to external financing sources. The main findings indicate that women and customers with higher socioeconomic status not only face price discrimination but are also offered oversized systems. There is no evidence of such practices towards customers with prior product information or those who have secured external financing for the purchase.

2. The Hidden Costs of Tariff Misclassification: Structural Winners and Losers with Hernán Bejarano and Pedro Hancevic (revise and resubmit round 2)

   Abstract: We propose an empirical model to evaluate firms’ choices in electric tariff contracting. By combining novel data from the Non-residential Electricity Consumption Survey (ENCENRE) with utility billing data from the national utility company, we analyze two pathological situa- tions revealed by the electric bills of commercial and service SMEs in Aguascalientes, Mexico, during 2019 and 2020. First, despite being banned, many firms pay the residential tariff. Among these firms, some pay the regular subsidized rate, while others pay the high-demand rate, which is higher than the corresponding business rate. Additionally, for another group of companies, there are two competing business tariffs, many of which are misclassified and thus must be re-categorized to afford less expensive electric bills. A rich set of explanatory variables is used to quantify the two biases, explain the wrong decisions, estimate hidden costs and subsidies at the national level, and provide valuable policy implications.

3. Energy Efficiency Audits for Small Firms in Mexico with Hernán Bejarano and Pedro Hancevic

   Abstract: Enhancing energy efficiency is crucial, particularly in the context of fossil-based electricity production, as observed in developing countries like Mexico, where each consumed megawatt generates significant emissions. This paper explores the potential for enabling firms to reduce their electricity consumption and, consequently, their emissions. Specifically, we randomly offered a free energy efficiency audit to a group of micro and small-sized establishments in the trade and services sectors in Mexico. This experimental approach allows us to estimate how firms adjust their consumption in response to energy efficiency information. Our results reveal decreases in electricity consumption and expenditure, approximately 4--7% and 2--3%, respectively, following the energy audit. There are certain pre-existing differences between the firms that lead to heterogeneous treatment effects. Notably, these include the energy efficiency before the treatment, as measured by the global score, and the type of electricity rate contracted (residential versus business).

4. Social Interactions and Social Divisions in Program Intervention

   Abstract: Using micro-level data from the conditional cash transfer program Progresa in Mexico, this paper estimates a behavioral model of school attendance and social interactions to study how social divisions due to program targeting can affect the complementarities arising from social interactions as well as their subsequent effects on program outcomes. The qualitative evaluation of the program indicated that social divisions manifested between beneficiaries and non-beneficiaries as a result of the program’s targeting. However, the empirical evidence suggests that the distinction introduced by the program between beneficiaries and non-beneficiaries did not alter the endogenous-effects network and therefore the complementarities. The evidence is consistent with a positive spillover program effect on school attendance and an endogenous effect accounting for 25 percent of the overall treatment effect.

Work in Progress

1. Assessing the Impact of Minimum Energy Efficiency Standards for Rental Properties with Pedro Hancevic

   Abstract: The global energy system is currently undergoing rapid transformation. Research indicates that rental homes remain behind in energy efficiency compared to owner-occupied residential buildings. Specifically, studies show landlords in the U.S. are less inclined to invest in high-efficiency measures. This reluctance stems from the fact that, when tenants are responsible for paying the energy bills, landlords do not reap the benefits from lower energy bills, giving rise to what is known as the split incentives or landlord-tenant problem. The cumulative impact of these inefficiencies results in increased energy consumption and expenses for renters, as well as contributing to excessive emissions. In 2020, with the intention of increasing renters’ living standards and curbing energy waste, the Gainesville City Commission in Florida adopted the Rental Housing Ordinance (RHO). This ordinance, which went into effect in October 2021, established a permit and inspection process for all residential rental units to raise energy efficiency and property maintenance standards. Using the list of homes with a rental license and the results from the rental inspections conducted since October 2021, this paper investigates whether the adoption of the RHO resulted in a decrease in energy consumption and energy bills, while also examining the social benefits arising from the potential reduction in pollutant emissions.

2. Unlocking the Potential: Factors Influencing Residential Photovoltaic System Adoption in Mexico with Hernán Bejarano, Brandon García, and Pedro Hancevic

3. Sentiments and Consumer Spending: Evidence from Florida’s Metro Areas with Anita Walsh

4. Undercoverage and Partial Identification with Covariates with Armand Kapllani