A New Look at Residential Electricity Demand Using Household Expenditure Data

Harrison Fell, Shanjun Li and Anthony Paul ()
Additional contact information
Anthony Paul: RFF (Resources for the Future)

No 2012-04, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: The recent push for a federal energy policy that could substantially change electricity prices in the U.S. highlights the need to obtain accurate residential electricity demand estimates. Many electricity demand estimates have been obtained based on the assumption that consumers optimize with respect to known marginal prices, but increasing empirical evidence suggests that consumers are more likely to respond to average prices. Under this assumption, this paper develops a new strategy based on GMM to estimate household electricity demand. Our approach allows a national-level demand estimation from publicly available expenditure data and utility-level consumption data, complementing studies that use individual billing data which are richer yet often proprietary. We estimate the price elasticity near -1, which is at the upper end (in magnitude) among the estimates from previous studies. We apply our elasticity estimates in a U.S. climate policy simulation to determine how these elasticity estimates alter consumption and price outcomes compared to the more conservative elasticity estimates commonly used in policy analysis.

Keywords: Electricity Demand; CEX; GMM; Cap-and-trade (search for similar items in EconPapers)
JEL-codes: C5 D12 Q4 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2012-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://econbus-papers.mines.edu/working-papers/wp201204.pdf First version, 2012 (application/pdf)

Related works:
Journal Article: A new look at residential electricity demand using household expenditure data (2014)
Working Paper: A New Look at Residential Electricity Demand Using Household Expenditure Data (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:mns:wpaper:wp201204

Access Statistics for this paper

More papers in Working Papers from Colorado School of Mines, Division of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Jared Carbone ().