The Well-Being Costs of Energy Poverty: The Role of Affective Channels

Emmanuel Asane-Otoo () and Abigail Opokua Asare ()
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Emmanuel Asane-Otoo: University of Oldenburg, Department of Economics
Abigail Opokua Asare: University of Oldenburg, Department of Economics

No V-455-26, Working Papers from University of Oldenburg, Department of Economics

Abstract: This paper examines the impact of energy poverty on subjective well-being in Germany using longitudinal data from the German Socio-Economic Panel (SOEP) over the period 2010–2023. Exploiting within-individual variation, we estimate fixed-effects models using objective, subjective, and composite indicators of energy poverty. Energy poverty is associated with a statistically significant and economically meaningful decline in life satisfaction, even after controlling for income, health status, and household characteristics. The negative association persists among households that are not income-poor, indicating that energy poverty constitutes a distinct dimension of material deprivation. Effects are strongest for subjective and multidimensional indicators, highlighting the importance of perceived energy deprivation and lived experience. Causal mediation analysis suggests that these well-being losses operate primarily through psychological and emotional channels. These findings imply that policies targeting energy affordability and housing efficiency may generate substantial welfare gains beyond income-based support.

Keywords: Energy poverty; Subjective well-being; Energy affordability; Multidimensional poverty; Panel data (search for similar items in EconPapers)
JEL-codes: C23 D63 I14 I31 Q48 (search for similar items in EconPapers)
Date: 2026-04, Revised 2026-04
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Published in Oldenburg Working Papers V-455-26

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