Residential consumption of gas and electricity in the U.S.: The role of prices and income

Anna Alberini, Will Gans and Daniel Velez-Lopez

Energy Economics, 2011, vol. 33, issue 5, 870-881

Abstract: We study the residential demand for electricity and gas, working with nationwide household-level data that cover recent years, namely 1997-2007. Our dataset is a mixed panel/multi-year cross-sections of dwellings/households in the 50 largest metropolitan areas in the United States as of 2008. We estimate static and dynamic models of electricity and gas demand. We find strong household response to energy prices, both in the short and long term. From the static models, we get estimates of the own price elasticity of electricity demand in the -Â 0.860 to -Â 0.667 range, while the own price elasticity of gas demand is -Â 0.693 to -Â 0.566. These results are robust to a variety of checks. Contrary to earlier literature (Metcalf and Hassett, 1999; Reiss and White, 2005), we find no evidence of significantly different elasticities across households with electric and gas heat. The price elasticity of electricity demand declines with income, but the magnitude of this effect is small. These results are in sharp contrast to much of the literature on residential energy consumption in the United States, and with the figures used in current government agency practice. Our results suggest that there might be greater potential for policies which affect energy price than may have been previously appreciated.

Keywords: Residential; electricity; and; gas; demand; Price; elasticity; of; energy; demand; Static; model; Dynamic; panel; data; model; Partial; adjustment; model (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (162)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988311000351
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Residential Consumption of Gas and Electricity in the U.S.: The Role of Prices and Income (2011)
Working Paper: Residential Consumption of Gas and Electricity in the U.S.: The Role of Prices and Income (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:33:y:2011:i:5:p:870-881

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().