Expenditure-Based Indicators of Energy Poverty—An Analysis of Income and Expenditure Elasticities

Abstract

Energy poverty is high up on national and European Union policy agendas. A number of possible indicators to measure the issue have been identified in the literature, but comparable data with European coverage is scarce. The EU Commission thus proposes four independent indicators on the “EU Energy Poverty Observatory” based on self-reported items from the pan-European surveys on income and living conditions (SILC) and household budgets (HBS). It is of increasing public interest to analyse social impacts of energy policies, and quantify energy poverty indicators also from modelling. This paper first shortly outlines how the expenditure-based indicators using HBS micro data may be directly linked to existing macroeconomic models through their defining variables (energy expenditure and income). As endogenous modelling based on micro data is difficult, the link may be country-specific elasticities. The main contribution of the paper is a systematic in-depth sensitivity analysis of the two indicators to changes in income and energy expenditure following varying patterns in the underlying distributions of the micro data. The results may be used by future soft links to models. The results display sometimes counterintuitive effects. We find that whether these indicators increase/decrease after a change of income or energy expenditure largely depends on the specific country-wise income and energy expenditure distribution between households on a micro-level. Due to their definition, the examined indicators are especially sensitive, when income changes alter the indicator threshold values, which in these cases are the median values in underlying distributions. We discuss these findings and relate them to several indicator shortcomings and potential remedies through changes in indicator definition.

An Evaluation Framework for Sustainable Plus Energy Neighbourhoods: Moving Beyond the Traditional Building Energy Assessment

“…Affordability of Energy is the adoption the standardised European "arrears" and "share of income spent on energy" indicators for energy poverty developed by the European Energy Poverty Observatory (EPOV) [69]. It is measured through a household survey and reflects the wider goal of providing just sustainable transition for all [70].…”

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Behavior Patterns, Energy Consumption and Comfort during COVID-19 Lockdown Related to Home Features, Socioeconomic Factors and Energy Poverty in Madrid

“…Finally, one of the limitations in the use of the ten percent rule indicator to define households' energy poverty, was derived from the relativeness among home-income levels, and the differences found between countries [85], also related to differences in national energy prices [86]. Despite being an indicator based on energy expenditure, its application in national contexts complemented with other multidimensional indicators should be considered [87], as already shown in the recent literature.…”

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