IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v93y2021ics0140988320303777.html
   My bibliography  Save this article

A new approach to analyse conditional demand: An application to Australian energy consumption

Author

Listed:
  • Selvanathan, Saroja
  • Selvanathan, E.A.
  • Jayasinghe, Maneka

Abstract

Laitinen et al. (1983) proposed an extension to the Working's (1943) Model which allows the marginal share to be a linear function of the corresponding budget share. In this paper, we derive the conditional (within a group of goods) version of Laitinen's Generalized Working's Model which is an important and useful generalization of the popular Working's Model with respect to the conditional case. We then use the new model to analyse the Australian energy consumption patterns conditionally for electricity, gas, petrol, and diesel using the most recent ABS Household Expenditure Survey 2015–2016 data. We found some interesting energy consumption patterns in Australia at (a) states/territories (b) remoteness of location and (c) income group levels. The results indicate that energy, as a group, is a necessity for all Australian households irrespective of their income and where they live. Within specified energy group, electricity is a necessity and petrol and diesel are luxuries for households across Australia and households of all income groups. Gas switches between being a necessity or a luxury based on the state/territory and level of remoteness. This is an appealing result that illustrates the valuable property of the Generalized Working's Model whereby a good can switch from a luxury to a necessity and vice versa, something that is ruled out in the original Working's Model.

Suggested Citation

  • Selvanathan, Saroja & Selvanathan, E.A. & Jayasinghe, Maneka, 2021. "A new approach to analyse conditional demand: An application to Australian energy consumption," Energy Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:eneeco:v:93:y:2021:i:c:s0140988320303777
    DOI: 10.1016/j.eneco.2020.105037
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988320303777
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2020.105037?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ye, Yuxiang & Koch, Steven F. & Zhang, Jiangfeng, 2018. "Determinants of household electricity consumption in South Africa," Energy Economics, Elsevier, vol. 75(C), pages 120-133.
    2. Maneka Jayasinghe & Eliyathamby A. Selvanathan & Saroja Selvanathan, 2019. "An intertemporal analysis of expenditure elasticities under three expenditure specifications for Sri Lanka," Applied Economics, Taylor & Francis Journals, vol. 51(59), pages 6376-6392, December.
    3. Gan‐Ochir Doojav & Kaliappa Kalirajan, 2019. "Income and price elasticities of electricity demand in Australia: Evidence of state‐specific heterogeneity," Australian Economic Papers, Wiley Blackwell, vol. 58(2), pages 194-206, June.
    4. Maneka Jayasinghe & Shyama Ratnasiri & Christine Smith & Andreas Chai, 2018. "Domestic technology, consumption economies of scale and poverty: evidence from Sri Lanka," Applied Economics, Taylor & Francis Journals, vol. 50(16), pages 1777-1789, April.
    5. Kenneth W Clements & Jiawei Si, 2018. "Engel’s Law, Diet Diversity, and the Quality of Food Consumption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(1), pages 1-22.
    6. Chambwera, Muyeye & Folmer, Henk, 2007. "Fuel switching in Harare: An almost ideal demand system approach," Energy Policy, Elsevier, vol. 35(4), pages 2538-2548, April.
    7. Van Hoa, Tran & Ironmonger, D. S. & Manning, I., 1983. "Energy consumption in Australia : Evidence from a generalized working model," Economics Letters, Elsevier, vol. 12(3-4), pages 383-389.
    8. Lazear, Edward P & Michael, Robert T, 1980. "Family Size and the Distribution of Real Per Capita Income," American Economic Review, American Economic Association, vol. 70(1), pages 91-107, March.
    9. Sonia Bhalotra & Cliff Attfield, 1998. "Intrahousehold resource allocation in rural Pakistan: a semiparametric analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 463-480.
    10. Awaworyi Churchill, Sefa & Smyth, Russell, 2020. "Ethnic diversity, energy poverty and the mediating role of trust: Evidence from household panel data for Australia11We thank two referees for constructive comments. This article uses unit record data ," Energy Economics, Elsevier, vol. 86(C).
    11. Maneka Savithri Jayasinghe & Christine Smith & Andreas Chai & Shyama Ratnasiri, 2016. "The implications of income dependent equivalence scales for measuring poverty in Sri Lanka," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(12), pages 1300-1314, December.
    12. Saroja Selvanathan & E.A. Selvanathan & Saad Albalawi & Moazzem Hossain, 2016. "Meat and fish consumption patterns in Saudi Arabia," Applied Economics, Taylor & Francis Journals, vol. 48(5), pages 446-460, January.
    13. Moshiri, Saeed, 2015. "The effects of the energy price reform on households consumption in Iran," Energy Policy, Elsevier, vol. 79(C), pages 177-188.
    14. Laitinen, Kenneth & Theil, Henri & Raparla, Tejaswi, 1983. "A generalization of working's model," Economics Letters, Elsevier, vol. 13(1), pages 97-100.
    15. Awaworyi Churchill, Sefa & Smyth, Russell & Farrell, Lisa, 2020. "Fuel poverty and subjective wellbeing," Energy Economics, Elsevier, vol. 86(C).
    16. Haining Wang & Zhiming Cheng & Russell Smyth, 2019. "Consumption and Happiness," Journal of Development Studies, Taylor & Francis Journals, vol. 55(1), pages 120-136, January.
    17. Clements, Kenneth W. & Goldschmidt, Peter S. & Theil, Henri, 1985. "A conditional version of working's model," Economics Letters, Elsevier, vol. 18(1), pages 97-99.
    18. S. Rajapakse, 2011. "Estimation of a complete system of nonlinear Engel curves: further evidence from Box-Cox Engel curves for Sri Lanka," Applied Economics, Taylor & Francis Journals, vol. 43(3), pages 371-385.
    19. Maneka Jayasinghe, 2019. "Dynamic trends in household poverty and inequality in Sri Lanka: do gender and ethnicity matter?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 24(2), pages 208-223, April.
    20. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jayasinghe, Maneka & Selvanathan, E.A. & Selvanathan, Saroja, 2021. "Energy poverty in Sri Lanka," Energy Economics, Elsevier, vol. 101(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jayasinghe, Maneka & Selvanathan, E.A. & Selvanathan, Saroja, 2021. "Energy poverty in Sri Lanka," Energy Economics, Elsevier, vol. 101(C).
    2. Ye, Yuxiang & Koch, Steven F., 2021. "Measuring energy poverty in South Africa based on household required energy consumption," Energy Economics, Elsevier, vol. 103(C).
    3. Maneka Jayasinghe & Christine Smith, 2021. "Poverty Implications of Household Headship and Food Consumption Economies of Scales: A Case Study from Sri Lanka," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(1), pages 157-185, May.
    4. Md. Matiur Rahman & Seung-Hoon Jeon & Kyoung-Soo Yoon, 2020. "Estimation of Equivalence Scale and Assessment of Its Impact on Poverty Measurement in Bangladesh," Sustainability, MDPI, vol. 12(21), pages 1-13, October.
    5. Rodriguez-Alvarez, Ana & Llorca, Manuel & Jamasb, Tooraj, 2021. "Alleviating energy poverty in Europe: Front-runners and laggards," Energy Economics, Elsevier, vol. 103(C).
    6. Zhao, Jun & Shahbaz, Muhammad & Dong, Kangyin, 2022. "How does energy poverty eradication promote green growth in China? The role of technological innovation," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    7. Cheng, Zhiming & Guo, Liwen & Smyth, Russell & Tani, Massimiliano, 2022. "Childhood adversity and energy poverty," Energy Economics, Elsevier, vol. 111(C).
    8. Xia, Wanjun & Murshed, Muntasir & Khan, Zeeshan & Chen, Zhenling & Ferraz, Diogo, 2022. "Exploring the nexus between fiscal decentralization and energy poverty for China: Does country risk matter for energy poverty reduction?," Energy, Elsevier, vol. 255(C).
    9. Muhammad Shafiullah & Zhilun Jiao & Muhammad Shahbaz & Kangyin Dong, 2023. "Examining energy poverty in Chinese households: An Engel curve approach," Australian Economic Papers, Wiley Blackwell, vol. 62(1), pages 149-184, March.
    10. Simshauser, Paul, 2021. "Vulnerable households and fuel poverty: Measuring the efficiency of policy targeting in Queensland," Energy Economics, Elsevier, vol. 101(C).
    11. Bukari, Chei & Broermann, Shanaz & Okai, Davidson, 2021. "Energy poverty and health expenditure: Evidence from Ghana," Energy Economics, Elsevier, vol. 103(C).
    12. K.W. Clements & R. Finke & H. Theil & M.D. Smith, 1984. "Two Short Papers in Consumption Economics," Economics Discussion / Working Papers 84-07, The University of Western Australia, Department of Economics.
    13. Fry, Jane M. & Farrell, Lisa & Temple, Jeromey B., 2022. "Energy poverty and retirement income sources in Australia," Energy Economics, Elsevier, vol. 106(C).
    14. Kahouli, Sondès & Okushima, Shinichiro, 2021. "Regional energy poverty reevaluated: A direct measurement approach applied to France and Japan," Energy Economics, Elsevier, vol. 102(C).
    15. P. Goldschmidt, 1990. "Economic Aspects of Alcohol Consumption in Australia: Part 2," Economics Discussion / Working Papers 90-17, The University of Western Australia, Department of Economics.
    16. Awaworyi Churchill, Sefa & Smyth, Russell, 2021. "Energy poverty and health: Panel data evidence from Australia," Energy Economics, Elsevier, vol. 97(C).
    17. Bargain, Olivier & Donni, Olivier & Kwenda, Prudence, 2014. "Intrahousehold distribution and poverty: Evidence from Côte d'Ivoire," Journal of Development Economics, Elsevier, vol. 107(C), pages 262-276.
    18. Olivier Bargain & Olivier Donni & Prudence Kwenda, 2011. "Intrahousehold Distribution and Child Poverty: Theory and Evidence from Côte d'Ivoire," Working Papers 2011-031, Human Capital and Economic Opportunity Working Group.
    19. Bohlmann, J.A. & Inglesi-Lotz, R., 2021. "Examining the determinants of electricity demand by South African households per income level," Energy Policy, Elsevier, vol. 148(PA).
    20. Gong, X. & van Soest, A.H.O. & Zhang, P., 2000. "Sexual Bias and Household Consumption : A Semiparametic Analysis of Engel curves in Rural China," Other publications TiSEM 896cf4d1-37e5-490b-9e05-4, Tilburg University, School of Economics and Management.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:93:y:2021:i:c:s0140988320303777. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.