Household responses to winter heating costs: Implications for energy pricing policies and demand-side alternatives

Dylan Brewer

Energy Policy, 2023, vol. 177, issue C

Abstract: I conduct a survey that presents research subjects with hypothetical costs to adjust their thermostats. I estimate responses to the cost of heating and analyze the causes for heterogeneity in household demand for energy services using the survey results as a complete-information baseline. I find that even at the highest price level ($8 per 5 °F or 2.8 °C), half of the participants exhibit zero response to price. On average, a 100 percent increase in the marginal cost of heating the home induces a 0.31 to 0.97 degree Fahrenheit (0.17 to 0.51 °C) reduction in the winter heating level, corresponding to a −0.005 to −0.014 elasticity. Further, I find that participants’ survey behavior with complete information can explain observed real-world temperature settings, suggesting a limited role for informational barriers or salience issues in energy-service demand heterogeneity. Inelastic demand suggests that energy efficiency policies may have high returns and that centralized demand–response policies may be required to address winter energy emergencies.

Keywords: Energy demand; Thermostat; Heating; Heterogeneity; Temperature (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:177:y:2023:i:c:s0301421523001350

DOI: 10.1016/j.enpol.2023.113550

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