Energy-related deprivation and housing tenure transitions

Fuel poverty and financial distress

“…Indeed, energy prices have the potential to satisfy the exclusion restrictions condition. Not least because prices are assumed to work directly through fuel poverty, specifically the expenditure share of income, thereby indirectly affecting outcomes of interest, in our case, financial distress ( Awaworyi Churchill et al, 2020 ; Kahouli, 2020 ; Awaworyi Churchill and Smyth, 2021 ; Munyanyi et al, 2021 ). Moreover, energy prices have further potential to satisfy the relevance condition, since one would expect energy prices to be positively and strongly associated with fuel poverty.…”

“…energy prices) and the endogenous variable (i.e. fuel poverty) ( Munyanyi et al, 2021 ). Considering such concerns, the present paper employs a novel yet complementary array of IVs, including: the marginal price M per unit of gas and electricity (£/kWh); the fixed charge F for supplying gas and/or electricity to the meter (£/year).…”

“…A better understanding of fuel poverty-induced financial distress is paramount in order to evaluate the full impact of policy interventions affecting energy consumption and expenditure. With rising energy prices and stagnant real income in GB ( BEIS, 2020a ), low-income households face difficult trade-offs between energy and other necessities, diminishing savings and/or incurring debt in order to maintain optimal levels of thermal comfort ( Harrington et al, 2005 ; Hills, 2011 ; Anderson et al, 2012 ; Grey et al, 2017 ; Munyanyi et al, 2021 ). In 2018, just over 1.1 million gas and 1.3 million electricity consumers were in arrears or repaying fuel debt in GB ( Ofgem, 2019 ).…”

“…We therefore model a more proximal relationship between fuel poverty, unpaid bills and perceptions about financial distress now and finances in the future. To alleviate endogeneity concerns, we rely upon regional variation in energy prices ( Awaworyi Churchill et al, 2020 ; Kahouli, 2020 ; Awaworyi Churchill and Smyth, 2021 ; Munyanyi et al, 2021 ), and further add to the literature by introducing a robust set of instruments. We exploit the between- and within-region variation of nonlinear pricing in GB's retail energy market using annual regional-level gas and electricity retail unit prices (£/kWh), fixed charges (£/year), and the fixed charge to unit price ratio – all of which are further disaggregated by payment methods (i.e.…”

“…credit, direct debit and prepayment). This approach provides additional within-variation compared to regional-level energy consumer price indices ( Awaworyi Churchill et al, 2020 ; Awaworyi Churchill and Smyth, 2021 ; Munyanyi et al, 2021 ) and appears more robust than the sole use of unit prices ( Kahouli, 2020 ).…”