Abstract In 1978, California adopted building codes designed to reduce the energy used for temperature control. Using a rich data set of hourly electricity consumption for 158,112 houses in Sacramento, we estimate that the average house built just after 1978 uses 8% to 13% less electricity for cooling than a similar house built just before 1978. Comparing the estimated savings to the policy's projected cost, our results suggest the policy passes a cost-benefit test. In settings where market failures prevent energy costs from being completely passed through to home prices, building codes can serve as a cost- effective tool for improving energy efficiency.