Now or later: The long tail effect of household income on energy consumption

Jingxin Gao, Changzan Duan, Jinbo Song and Weiguang Cai

Energy Economics, 2024, vol. 129, issue C

Abstract: In residential buildings, energy-using appliances support nearly all domestic needs, such as heating, cooling, cooking, lighting, and entertainment, and constitute the bulk of household energy consumption. However, decoupling between purchasing energy-using appliances and consuming energy may run counter to the basic expectation of the income consumption curve based on the most established theory of utility. Instead, we expect a long-tailed curve with a left deviation, that is, the long tail effect of income on household energy consumption. We thus rigorously examined the long tail effect by describing the changes in energy consumption against increasing household income. Three empirical studies demonstrate a possible intrinsic mechanism, and four heterogenous tests investigate the extrinsic incentives. Evidently, when considering the priority in household bundles, the decoupling of purchasing energy-consuming appliances and energy consumption leads to a long tail effect. Without intervention, households with higher income are less persuaded to purchase energy-saving products than households with lower income. Moreover, extrinsic incentives can influence intrinsic appeal and the long tail effect. We advance the conceptual and practical understanding of the exceptional consumption pattern of household energy, which is an indispensable and low-priority consumption in household bundles. The findings can provide researchers and policymakers with more detailed theoretical and practical instructions on how to encourage different households to form low-energy consumption patterns and apply energy-efficient appliances.

Keywords: Household energy consumption; Income; Long tail effect; Intrinsic mechanism; Extrinsic incentives (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007545

DOI: 10.1016/j.eneco.2023.107256

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