Fuel poverty and financial distress

Andrew Burlinson, Monica Giulietti, Cherry Law and Hui-Hsuan Liu

Energy Economics, 2021, vol. 102, issue C

Abstract: Governments and advocacy groups have drawn attention to the precarious position of those members of society who are unable to attain an adequate level of energy services, i.e. the fuel poor. Concerns have also arisen about the ability of fuel poor individuals to adapt to the hardship recently brought about by the COVID-19 pandemic. This paper contributes to the literature by exploring empirically the link between fuel poverty and financial distress prior to and during the first wave the COVID-19 pandemic. The analysis is based on the most recent longitudinal, nationally representative survey of the United Kingdom, Understanding Society (UKHLS, Wave 10, January 2018–February 2020). After correcting for the effects of potential endogeneity in the variables of interest, our results identify a statistically robust relationship between fuel poverty indicators and self-reported measures of current financial distress, with stronger effects for subjective indicators. The fuel poverty indicators however exert only a limited influence on an individual's expectation of their future financial situation. Our analysis of the first wave of the COVID-19 pandemic also confirms that fuel poverty contributed to financial distress. Our main findings are robust to a suite of specification and sensitivity checks. Our results lead to recommend assessing measures which target fuel poverty on the basis of their potential indirect effect on financial distress.

Keywords: Fuel poverty; Energy poverty; Financial distress; Household finance; COVID-19 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:102:y:2021:i:c:s0140988321003509

DOI: 10.1016/j.eneco.2021.105464

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