Do Energy Burdens Contribute to Economic Poverty in the United States? A Panel Analysis

Abstract

For many households, energy consumption represents a non-discretionary portion of their budget and directly relates to quality of life. As researchers continue to study the environmental impacts of energy behavior, it is important to explore how energy consumption relates to socio-economic wellbeing. This paper examines the economic impacts of being energy-burdened in the United States, defined as spending at least 10% of household income on heating and electricity services; energy burdens are partially, but not entirely, driven by income, since energy needs and costs can vary substantially due to housing characteristics, utility rates, and other factors. Using panel data of US household income and energy expenditures during 1999–2017, this analysis demonstrates that energy-burdened households were at about 150%–200% greater risk of transitioning into or extending the duration of economic poverty over a two-year timeframe relative to non-burdened households. This analysis indicates that dedicating inordinate amounts of income to energy services can threaten a household’s economic well-being over time, possibly by preventing a household from engaging in other economic activities or compounding existing economic hardship. These results emphasize the importance of energy assistance and energy efficiency for low-income households, drawing attention to how structures of energy consumption, the welfare state, and social stratification intertwine.

Surviving a Shut-Off: U.S. Households at Greatest Risk of Utility Disconnections and How They Cope

“…The confluence of rising costs and more intense energy usage presents new challenges for households with low incomes. In their study of U.S. household energy expenditures from 1999 to 2017, Bohr and McCreery (2020) found that households spending at least 10% of their income on heating and electricity services experienced a 150% to 200% greater risk of transitioning into poverty than households spending less than 10% of their income on energy services. As both the consumption and the financial burden of energy increases, it is becoming more imperative for social scientists to understand the prevalence of disconnections and the coping strategies households use to keep the lights on, the stove hot, and the furnace running.…”

Characterizing the Energy Burden of Urban Households in Mexico: The Impact of Socioeconomic and Temperature Conditions Across Metropolitan Areas

“…Households in the other three cities in this cluster, Moreolón-Uriangato (11.04), Córdoba (30.03),and Teziutlán (21.03), might be able to cover their energy needs, but their low income might push them into energy insecurity. Poverty alleviation strategies, tailored to the needs of energy-insecure households to avoid getting caught in cycles of poverty, might improve the economic situation, and consequently, the energy burden in these five cities (Bohr and McCreery, 2020).…”

Addressing Energy Equity in the United States: Policy Considerations for Federal Investment

“…6 For households with lower income, a 6 percent or more expense is a substantial share of their financial resources, whereas households with a much larger monthly income may spend a smaller percentage on utility bills. Energy burden, while linked with income poverty, is a complex issue with many contributing factors that include utility rates, household income, housing type and quality, and housing energy efficiency (Bohr and McCreery 2019). Even as low-income and non-white households may consume less energy than other households, poor housing efficiency and the age of dwellings-among other factors that require further research-contribute to high burden (Bednar et al 2017).…”