Income shocks and residential energy consumption: Evidence from Vietnam

Cuong Nguyen

Energy Economics, 2025, vol. 149, issue C

Abstract: Estimating the income effect on household demand for energy is challenging due to the endogeneity of household income. Using lottery winnings as an exogenous shock, we demonstrate how an income shock affects residential energy consumption in Vietnam. Our findings indicate that lottery winnings reduce the consumption of traditional energy sources, including wood and coal, while increasing electricity consumption. A 1 % increase in lottery winnings reduces expenditure on wood and coal by 0.036 % and increases expenditure on electricity by 0.021 %. Additionally, we find that lottery winnings lead to increased ownership of electrical appliances, thereby indirectly raising household electricity consumption.

Keywords: Income shock; Energy policy; Residential electricity; Cash transfers; Vietnam (search for similar items in EconPapers)
JEL-codes: O22 P43 Q41 Q48 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:149:y:2025:i:c:s014098832500605x

DOI: 10.1016/j.eneco.2025.108778

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