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28/03/2024
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Nguyen, N. D., Nguyen, D. V., Dao, K. T., Than, T. T., & Nguyen, D. D. (2024). Income and electricity consumption issue: evidence from European households. Journal of International Economics and Management, 24(1), 61-73. https://doi.org/10.38203/jiem.024.1.0080
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Income and electricity consumption issue: evidence from European households
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Abstract
Research on electricity consumption plays an important role in the development of sustainable national strategies and mitigation of global climate change. With global economic development in general, and Europe in particular, the demand for electricity in households is increasing. Therefore, based on demand theory, this study evaluates the impact of income on electricity consumption in European households. Data were collected from 35 European countries and analyzed. The instrumental variable regression results indicate that income positively impacts electricity consumption in European households. The electricity consumption of European households provides evidence that supports the prediction of demand theory, as an increase in household income as well as a decrease in price leads to a rise in overall consumption. However, the effect of price is not statistically significant. The findings also show that population growth and inflation positively influence household electricity consumption. The outcomes of this study have theoretical and practical implications for improving energy efficiency and effective electricity use in European households. Therefore, it is necessary to continue implementing energy-saving strategies at the household level in the context of increasing electricity consumption in Europe.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Keywords
Income, Electricity consumption, Sustainability, Households, European households
References
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Widen, J. and Wackelgard, E. (2010), “A high-resolution stochastic model of domestic activity patterns and electricity demand”, Applied Energy, Vol. 87 Vol. 6, pp. 1880 - 1892.
Wolfram, C., Shelef, O. and Gertler, P. (2012), “How will energy demand develop in the developing world?”, Journal of Economic Perspectives, Vol. 26 No. 1, pp. 119 - 138.
World Bank. (2023), “Data World Bank”, Available at https://data.worldbank.org/indicator/SP.POP.TOTL (Accessed 10 April, 2023).
Yunusov, T. and Torriti, J. (2021), “Distributional effects of time of use tariffs based on electricity demand and time use”, Energy Policy, Vol. 156, 112412.
Cleland, J. and Wilson, C. (1987), “Demand theories of the fertility transition: an iconoclastic view”, Population Studies, Vol. 41 No. 1, pp. 5 - 30.
D’Acunto, F., Hoang, D. and Weber, M. (2016). “Unconventional fiscal policy, inflation expectations, and consumption expenditure”, CESifo Working Paper Series 5793, CESif, Munich.
Ding, Y.X. and Peng, S. (2020), “Study on the spatial distribution and influencing factors of household energy consumption in China”, Resource Development Market, Vol. 36 No. 4, pp. 366 - 370.
Ekholm, T., Krey, V., Pachauri, S. and Riahi, K. (2010), “Determinants of household energy consumption in India”, Energy Policy, Vol. 38 No. 10, pp. 5696 - 5707.
European Commission. (2019), “Fourth report on the state of the energy union”, Available at https://commission.europa.eu/publications/fourth-report-state-energy-union_en (Accessed 23 May, 2021).
Fan, J.L., Zhang, Y.J. and Wang, B. (2017), “The impact of urbanization on residential energy consumption in China: an aggregated and disaggregated analysis”, Renewable and Sustainable Energy Reviews, Vol. 75, pp. 220 - 233.
Gunay, M.E. (2016), “Forecasting annual gross electricity demand by artificial neural networks using predicted values of socio-economic indicators and climatic conditions: case of Turkey”, Energy Policy, Vol. 90, pp. 92 - 101.
Guo, Z., Zhou, K., Zhang, C., Lu, X., Chen, W. and Yang, S. (2018), “Residential electricity consumption behavior: influencing factors, related theories and intervention strategies”, Renewable and Sustainable Energy Reviews, Vol. 81 Part 1, pp. 399 - 412.
Gustafson, D.J. (2013), “Rising food costs & global food security: key issues & relevance for India”, Indian Journal of Medical Research, Vol. 138 No. 3, pp. 398 - 410.
Hamilton, I.G., Steadman, P.J., Bruhns, H., Summerfield, A.J. and Lowe, R. (2013), “Energy efficiency in the British housing stock: energy demand and the homes energy efficiency database”, Energy Policy, Vol. 60, pp. 462 - 480.
Jones, R.V. and Lomas, K.J. (2015), “Determinants of high electrical energy demand in UK homes: socio-economic and dwelling characteristics”, Energy and Buildings, Vol. 101, pp. 24 - 34.
Kamaludin, M. (2013), “Electricity consumption in developing countries”, Asian Journal of Research in Social Sciences and Humanities, Vol. 2 No. 2, pp. 84 - 90.
Kotsila, D. and Polychronidou, P. (2021), “Determinants of household electricity consumption in Greece: a statistical analysis”, Journal of Innovation and Entrepreneurship, Vol. 10 No. 1, pp. 1 - 20.
Kwakwa, P.A. (2021), “The carbon dioxide emissions effect of income growth, electricity consumption and electricity power crisis”, Management of Environmental Quality: An International Journal, Vol. 32 No. 3, pp. 470 - 487.
Lianwei, Z. and Wen, X. (2021), “Urban household energy consumption forecasting based on energy price impact mechanism”, Frontiers in Energy Research, Vol. 9, 802697.
Louw, K., Conradie, B., Howells, M. and Dekenah, M. (2008), “Determinants of electricity demand for newly electrified low-income African households”, Energy Policy, Vol. 36 No. 8, pp. 2812 - 2818.
Lu, H. (2006), “An empirical analysis of the impact of farmers’ income level on the household energy consumption structure in the countryside”, Finance and Trade Research, Vol. 3, pp. 28 - 34.
Lu, Y., Khan, Z.A., Alvarez-Alvarado, M.S., Zhang, Y., Huang, Z. and Imran, M. (2020), “A critical review of sustainable energy policies for the promotion of renewable energy sources”, Sustainability, Vol. 12 No. 12, 5078.
Matsumoto, S., Mizobuchi, K. and Managi, S. (2022), “Household energy consumption”, Environmental Economics and Policy Studies, Vol. 24, pp. 1 - 5.
Moscati, I. (2007), “Early experiments in consumer demand theory: 1930-1970”, History of Political Economy, Vol. 39 No. 3, pp. 359 - 401.
Narayan, P.K. and Smyth, R. (2005), “Electricity consumption, employment and real income in Australia evidence from multivariate Granger causality tests”, Energy Policy, Vol. 33 No. 9, pp. 1109 - 1116.
Nejat, P., Jomehzadeh, F., Taheri, M.M., Gohari, M. and Majid, M.Z.A. (2015), “A global review of energy consumption, CO2 emissions and policy in the residential sector (with an overview of the top ten CO2 emitting countries)”, Renewable and Sustainable Energy Reviews, Vol. 43, pp. 843 - 862.
Olutomi, A.I. and Lester, H.C. (2007), “Modelling OECD industrial energy demand: asymmetric price responses and energy-saving technical change”, Energy Economics, Vol. 29 No. 4, pp. 693 - 709.
Sovacool, B.K. (2011), “Conceptualizing urban household energy use: climbing the energy services ladder”, Energy Policy, Vol. 39 No. 3, pp. 1659 - 1668.
Stern, D.I. (2019), “Energy and economic growth”, in Soytas, U. and Sari, R. (Eds.), Routledge Handbook of Energy Economics, Routledge, London, pp. 28 - 46.
Tan, Z., Ju, L., Reed, B., Rao, R., Peng, D., Li, H. and Pan, G. (2015), “The optimization model for multi-type customers assisting wind power consumptive considering uncertainty and demand response based on robust stochastic theory”, Energy Conversion and Management, Vol. 105, pp. 1070 - 1081.
Thivel, D., Tremblay, M.S. and Chaput, J.P. (2013), “Modern sedentary behaviors favor energy consumption in children and adolescents”, Current Obesity Reports, Vol. 2, pp. 50 - 57.
Tinbergen, J. (1975), Income differences: recent research, North-Holland Publisher, Amsterdam.
Vasseur, V., Marique, A.F. and Udalov, V. (2019), “A conceptual framework to understand households’ energy consumption”, Energies, Vol. 12 No. 22, 4250.
Weber, C. and Perrels, A. (2000), “Modelling lifestyle effects on energy demand and related emissions”, Energy Policy, Vol. 28 No. 8, pp. 549 - 566.
Widen, J. and Wackelgard, E. (2010), “A high-resolution stochastic model of domestic activity patterns and electricity demand”, Applied Energy, Vol. 87 Vol. 6, pp. 1880 - 1892.
Wolfram, C., Shelef, O. and Gertler, P. (2012), “How will energy demand develop in the developing world?”, Journal of Economic Perspectives, Vol. 26 No. 1, pp. 119 - 138.
World Bank. (2023), “Data World Bank”, Available at https://data.worldbank.org/indicator/SP.POP.TOTL (Accessed 10 April, 2023).
Yunusov, T. and Torriti, J. (2021), “Distributional effects of time of use tariffs based on electricity demand and time use”, Energy Policy, Vol. 156, 112412.