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In recent years, energy efficiency in the built environment has been attracting considerable interest to mitigate energy consumption. A number of scientific studies indicate that rising air pollution, decreasing biodiversity, ocean acidification and other adverse effects on humans and the environment in recent decades are due to greenhouse gas emissions, and a substantial share of the emissions can be attributed to energy usage in residential buildings. Investments in energy-efficient technologies have been made to alleviate such human induced causes contributing to the emissions, but they are still far from widespread, calling for a thorough understanding of individuals’ decision-making processes to promote further adoption of energy efficiency investments. Although personality has been widely recognised as an explanatory factor of behaviour, a rigorous discussion of it in the context of energy efficiency investments is missing. As such, to understand the role of personality traits in making high-cost energy efficiency investments in residential buildings, this research applies a multidisciplinary approach to derive theoretical models that are evaluated in subsequent empirical investigations using quantitative methods and data from the UK and Germany. The findings suggest three ways through which personality can influence energy efficiency investments. The first is an indirect impact of personality traits through risk preferences, in which the significance of the personality effects depends on the financial subsidy context. The second is an indirect effect of personality traits through environmental concern. The third way suggests an impact of personality traits through their importance for individuals’ capability and willingness to consider peer behaviour.

This study investigates whether energy efficiency investments are driven by differences in personality traits among homeowners. Using data on nearly 3,000 households in Germany, we estimate that compared to the median level, homeowners in the lowest quartile of Openness to Experience have 5.0%-23.4% lower propensity to invest in capital-intensive energy efficiency measures, while homeowners in the highest quartile of Agreeableness are 7.7%-18.0% less likelyto do so. Splitting the energy efficiency investments into two groups yields stronger effects of the same two personality traits for window modernisations and thermal insulation installations, whereas no impact of the personality traits is observed for solar energy and other alternative energy systems, possibly because subsidies for the latter were introduced much earlier in Germany, overriding any effects of personality traits in the investment decisions. These findings may also suggest that personality traits are of greater significance for marginal investors.