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Micro Econometric Modelling of Household Energy Use: Testing for Dependence between Demand for Electricity and Natural Gas

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  • Soren Leth-Petersen

Abstract

This paper contains a micro econometric analysis of household electricity and natural gas demand for a cross section of 2,885 Danish households observed in 1996. The sample includes fulltime employed couples in single family houses. The specification of the model is guided by an explorative nonparametric data analysis. The analysis reveals, among other things, the fairly surprising result that demand for heating is unaffected by the number of children in the household. The dependence between demand for gas and demand for electricity is examined in the paper. This is done by testing for separability of demand for gas from demand for electricity, and vice versa. Separability of electricity (gas) from gas (electricity) is tested by estimating demand for electricity (gas) conditional on demand for gas (electricity). The model allows for endogeneity of the conditional variable. Building regulations and individual time variation, that is panel data, identify the test. The test indicates that demand for electricity is separable from demand for natural gas, and that demand for natural gas is separable from demand for electricity. The result of the test is evidence in favour of single equation modelling of household energy demand in this context.

Suggested Citation

  • Soren Leth-Petersen, 2002. "Micro Econometric Modelling of Household Energy Use: Testing for Dependence between Demand for Electricity and Natural Gas," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 57-84.
    • Handle: RePEc:aen:journl:2002v23-04-a03
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    Cited by:

    1. Leahy, Eimear & Lyons, Sean, 2010. "Energy use and appliance ownership in Ireland," Energy Policy, Elsevier, vol. 38(8), pages 4265-4279, August.
    2. Labandeira, Xavier & Labeaga, José M. & López-Otero, Xiral, 2012. "Estimation of elasticity price of electricity with incomplete information," Energy Economics, Elsevier, vol. 34(3), pages 627-633.
    3. Pedregal, D.J. & Dejuán, O. & Gómez, N. & Tobarra, M.A., 2009. "Modelling demand for crude oil products in Spain," Energy Policy, Elsevier, vol. 37(11), pages 4417-4427, November.
    4. Rosas-Flores, Jorge Alberto & Morillón Gálvez, David & Fernández Zayas, José Luís, 2010. "Inequality in the distribution of expense allocated to the main energy fuels for Mexican households: 1968-2006," Energy Economics, Elsevier, vol. 32(5), pages 960-966, September.
    5. Blazquez Leticia & Nina Boogen & Massimo Filippini, 2012. "Residential electricity demand for Spain: new empirical evidence using aggregated data," CEPE Working paper series 12-82, CEPE Center for Energy Policy and Economics, ETH Zurich.
    6. Song, Nianfu & Aguilar, Francisco X. & Shifley, Stephen R. & Goerndt, Michael E., 2012. "Factors affecting wood energy consumption by U.S. households," Energy Economics, Elsevier, vol. 34(2), pages 389-397.
    7. Halim Tatli, 2018. "Multiple Determinants of Household Natural Gas Demand: A Panel Data Analysis in OECD Countries," Asian Development Policy Review, Asian Economic and Social Society, vol. 6(4), pages 243-253, December.
    8. Tilov, Ivan & Farsi, Mehdi & Volland, Benjamin, 2019. "Interactions in Swiss households’ energy demand: A holistic approach," Energy Policy, Elsevier, vol. 128(C), pages 136-149.
    9. Gaivoronskaia, Elizaveta, 2020. "Electricity demand elasticity and regional effects: Spatial econometric approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 58, pages 76-95.
    10. Laura Fernàndez-Villadangos, 2006. "Are two-part tariffs efficient when consumers plan ahead?: An empirical study," Working Papers CREAP2006-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2006.
    11. Cialani, Catia & Mortazavi, Reza, 2018. "Household and industrial electricity demand in Europe," Energy Policy, Elsevier, vol. 122(C), pages 592-600.
    12. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2006. "A Residential Energy Demand System for Spain," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 87-112.
    13. Olorunjuwon David Adetayo & Gbenga John Oladehinde & Samson A. Adeyinka & Adejompo Fagbohunka, 2021. "Household Energy Demand in Typical Nigerian Rural Communities," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 7(2), pages 165-185.
    14. David, Laurent & Le Breton, Michel & Merillon, Olivier, 2007. "Regulating the Natural Gas Transportation Industry: Optimal Pricing Policy of a Monopolist with Advance-Purchase and Spot Markets," IDEI Working Papers 488, Institut d'Économie Industrielle (IDEI), Toulouse.
    15. Langevin, J. & Reyna, J.L. & Ebrahimigharehbaghi, S. & Sandberg, N. & Fennell, P. & Nägeli, C. & Laverge, J. & Delghust, M. & Mata, É. & Van Hove, M. & Webster, J. & Federico, F. & Jakob, M. & Camaras, 2020. "Developing a common approach for classifying building stock energy models," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    16. Krauss, Alexander, 2016. "How natural gas tariff increases can influence poverty: Results, measurement constraints and bias," Energy Economics, Elsevier, vol. 60(C), pages 244-254.
    17. Medina, Eva & Vicéns, José, 2011. "Factores determinantes de la demanda eléctrica de los hogares en España: una aproximación mediante regresión cuantílica/Determinants of Household Electricity Demand in Spain: An Approach through Quant," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 29, pages 515-538, Agosto.
    18. Blázquez, Leticia & Boogen, Nina & Filippini, Massimo, 2013. "Residential electricity demand in Spain: New empirical evidence using aggregate data," Energy Economics, Elsevier, vol. 36(C), pages 648-657.
    19. Halicioglu, Ferda, 2007. "Residential electricity demand dynamics in Turkey," Energy Economics, Elsevier, vol. 29(2), pages 199-210, March.
    20. Desiderio Romero-Jordán & José Félix Sanz-Sanz, 2009. "Energy Taxes and Household Compliance with the Kyoto Protocol," Public Finance Review, , vol. 37(2), pages 142-169, March.
    21. Mohcine Bakhat & Jaume Roselló, 2011. "Tourism Induced Contribution to Diesel Oil and Gasoline Consumption," Working Papers 05-2011, Economics for Energy.
    22. Berkhout, Peter H. G. & Ferrer-i-Carbonell, Ada & Muskens, Jos C., 2004. "The ex post impact of an energy tax on household energy demand," Energy Economics, Elsevier, vol. 26(3), pages 297-317, May.
    23. Rosas-Flores, Jorge Alberto & Gálvez, David Morillón, 2010. "What goes up: Recent trends in Mexican residential energy use," Energy, Elsevier, vol. 35(6), pages 2596-2602.
    24. Rosas-Flores, Jorge Alberto, 2017. "Elements for the development of public policies in the residential sector of Mexico based in the Energy Reform and the Energy Transition law," Energy Policy, Elsevier, vol. 104(C), pages 253-264.

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    JEL classification:

    • F0 - International Economics - - General

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