IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v143y2020ics0301421520303219.html
   My bibliography  Save this article

Housing wealth and residential energy consumption

Author

Listed:
  • Bao, Helen X.H.
  • Li, Steven Haotong

Abstract

The housing wealth effect often manifests as a positive relationship between consumption and perceived housing wealth (e.g. the perceived value of houses). When the perceived value of a property rises, homeowners may feel more comfortable and secure about their wealth, causing them to spend more. This study adopts a behavioural approach to verify if this relationship holds true for residential energy consumption in the UK. While controlling for property characteristics and a large number of demographic, socioeconomic and energy-use behaviour variables, we identified a significant relationship between housing wealth and energy consumption. Our models also considered psychological biases in energy consumption behaviours, such as the framing effect. Our findings shed light on the behavioural aspects of housing wealth effect on residential energy consumption and demonstrate the potential to ‘nudge’ households towards energy conservation. Most importantly, we provide empirical evidence on the intriguing relationship among housing wealth, residential energy consumption and fuel poverty. The findings of this study are particularly helpful in designing and implementing energy consumption policies that can strike a balance between social justice and economic efficiency.

Suggested Citation

  • Bao, Helen X.H. & Li, Steven Haotong, 2020. "Housing wealth and residential energy consumption," Energy Policy, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:enepol:v:143:y:2020:i:c:s0301421520303219
    DOI: 10.1016/j.enpol.2020.111581
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520303219
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111581?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. F. Thomas Juster & Joseph P. Lupton & James P. Smith & Frank Stafford, 2006. "The Decline in Household Saving and the Wealth Effect," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 20-27, February.
    2. Legendre, Bérangère & Ricci, Olivia, 2015. "Measuring fuel poverty in France: Which households are the most fuel vulnerable?," Energy Economics, Elsevier, vol. 49(C), pages 620-628.
    3. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
    4. Frederic S. Mishkin, 1978. "Consumer Sentiment and Spending on Consumer Durables," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(1), pages 217-232.
    5. Amina Ahec �onje & Anita Ceh Casni & Maru�ka Vizek, 2012. "Does housing wealth affect private consumption in European post-transition countries? Evidence from linear and threshold models," Post-Communist Economies, Taylor & Francis Journals, vol. 24(1), pages 73-85, June.
    6. John Hills, 2012. "Final report of the Hills Independent Fuel Poverty Review: Getting the Measure of Fuel Poverty," CASE Reports casereport72, Centre for Analysis of Social Exclusion, LSE.
    7. Andreas Lehnert, 2004. "Housing, consumption, and credit constraints," Finance and Economics Discussion Series 2004-63, Board of Governors of the Federal Reserve System (U.S.).
    8. John Hills, 2012. "Getting the measure of fuel poverty: Executive summary," CASE Briefs 31, Centre for Analysis of Social Exclusion, LSE.
    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. Platell, Monique & Martin, Karen & Fisher, Colleen & Cook, Angus, 2020. "Comparing adolescent and service provider perceptions on the barriers to mental health service use: A sequential mixed methods approach," Children and Youth Services Review, Elsevier, vol. 115(C).
    2. Pommeret, Aude & Schubert, Katheline, 2022. "Optimal energy transition with variable and intermittent renewable electricity generation," Journal of Economic Dynamics and Control, Elsevier, vol. 134(C).
    3. Gholami, M. & Torreggiani, D. & Tassinari, P. & Barbaresi, A., 2021. "Narrowing uncertainties in forecasting urban building energy demand through an optimal archetyping method," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    4. Hammerle, Mara & Burke, Paul J., 2022. "From natural gas to electric appliances: Energy use and emissions implications in Australian homes," Energy Economics, Elsevier, vol. 110(C).
    5. Khouja, Moutaz & Hammami, Ramzi, 2023. "Optimizing price, order quantity, and return policy in the presence of consumer opportunistic behavior for online retailers," European Journal of Operational Research, Elsevier, vol. 309(2), pages 683-703.
    6. Hameed, Zeenat & Hashemi, Seyedmostafa & Ipsen, Hans Henrik & Træholt, Chresten, 2021. "A business-oriented approach for battery energy storage placement in power systems," Applied Energy, Elsevier, vol. 298(C).
    7. Mangipinto, Andrea & Lombardi, Francesco & Sanvito, Francesco Davide & Pavičević, Matija & Quoilin, Sylvain & Colombo, Emanuela, 2022. "Impact of mass-scale deployment of electric vehicles and benefits of smart charging across all European countries," Applied Energy, Elsevier, vol. 312(C).
    8. Jianhua Zhang & Xiaolong Liu & Dimitris Ballas, 2023. "Spatial and relational peer effects on environmental behavioral imitation," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(4), pages 575-599, October.
    9. Ping Wang & Shen-Li Li & Shao-Hui Zou, 2023. "Does Off-Farm Employment Promote the Low-Carbon Energy Intensity in China’s Rural Households?," Energies, MDPI, vol. 16(5), pages 1-16, March.
    10. Li, Xingguang, 2023. "Farmland rental market participation and residential energy consumption: Evidence from rural areas in China," Energy, Elsevier, vol. 268(C).
    11. Jiang, Peng & Fan, Yee Van & Klemeš, Jiří Jaromír, 2021. "Impacts of COVID-19 on energy demand and consumption: Challenges, lessons and emerging opportunities," Applied Energy, Elsevier, vol. 285(C).
    12. Liang, Jing & Qiu, Jiehong & Wang, Xiangrui & Wu, Jikai & Yang, Sansi & Zhou, You, 2024. "Examining energy inequality: The impact of household wealth on heterogeneous response to temperatures," Energy Policy, Elsevier, vol. 190(C).
    13. Ma, Shaoyue & Man, Hecheng & Li, Xiao & Xu, Xiangbo & Sun, Mingxing & Xie, Minghui & Zhang, Linxiu, 2023. "How nonfarm employment drives the households’ energy transition: Evidence from rural China," Energy, Elsevier, vol. 267(C).
    14. Byun, Manhee & Choe, Changgwon & Cheon, Seunghyun & Lee, Aejin & Lim, Hankwon, 2022. "Statistical and stochastic feasibility studies of potential liquid organic hydrogen carriers in a membrane reactor for simultaneous hydrogen storage and production: Technical, economic, and environmen," Renewable Energy, Elsevier, vol. 195(C), pages 1393-1411.
    15. Ferrari, Simone & Blázquez, Teresa & Dall'O', Giuliano, 2021. "Energy performance indexes based on monitored data of social housing buildings in Northern Italy," Applied Energy, Elsevier, vol. 298(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. Caitlin Robinson & Stefan Bouzarovski & Sarah Lindley, 2018. "Underrepresenting neighbourhood vulnerabilities? The measurement of fuel poverty in England," Environment and Planning A, , vol. 50(5), pages 1109-1127, August.
    2. Drescher, Katharina & Janzen, Benedikt, 2021. "Determinants, persistence, and dynamics of energy poverty: An empirical assessment using German household survey data," Energy Economics, Elsevier, vol. 102(C).
    3. Llorca, Manuel & Rodriguez-Alvarez, Ana & Jamasb, Tooraj, 2020. "Objective vs. subjective fuel poverty and self-assessed health," Energy Economics, Elsevier, vol. 87(C).
    4. Kahouli, Sondès & Okushima, Shinichiro, 2021. "Regional energy poverty reevaluated: A direct measurement approach applied to France and Japan," Energy Economics, Elsevier, vol. 102(C).
    5. Munyanyi, Musharavati Ephraim & Awaworyi Churchill, Sefa, 2022. "Foreign aid and energy poverty: Sub-national evidence from Senegal," Energy Economics, Elsevier, vol. 108(C).
    6. Xie, Lunyu & Hu, Xian & Zhang, Xinyi & Zhang, Xiao-Bing, 2022. "Who suffers from energy poverty in household energy transition? Evidence from clean heating program in rural China," Energy Economics, Elsevier, vol. 106(C).
    7. Gafa, Dede W. & Egbendewe, Aklesso Y.G., 2021. "Energy poverty in rural West Africa and its determinants: Evidence from Senegal and Togo," Energy Policy, Elsevier, vol. 156(C).
    8. Dorothée Charlier & Sondès Kahouli, 2019. "From Residential Energy Demand to Fuel Poverty: Income-induced Non-linearities in the Reactions of Households to Energy Price Fluctuations," The Energy Journal, , vol. 40(2), pages 101-138, March.
    9. Ye, Yuxiang & Koch, Steven F., 2021. "Measuring energy poverty in South Africa based on household required energy consumption," Energy Economics, Elsevier, vol. 103(C).
    10. Charlier, Dorothée, 2015. "Energy efficiency investments in the context of split incentives among French households," Energy Policy, Elsevier, vol. 87(C), pages 465-479.
    11. Igawa, Moegi & Managi, Shunsuke, 2022. "Energy poverty and income inequality: An economic analysis of 37 countries," Applied Energy, Elsevier, vol. 306(PB).
    12. Prakash, Kushneel & Munyanyi, Musharavati Ephraim, 2021. "Energy poverty and obesity," Energy Economics, Elsevier, vol. 101(C).
    13. Piotr Lewandowski & Katarzyna Salach, 2018. "Pomiar ubostwa energetycznego na podstawie danych BBGD - metodologia i zastosowanie," IBS Research Reports 01/2018, Instytut Badan Strukturalnych.
    14. Paudel, Jayash, 2021. "Why Are People Energy Poor? Evidence From Ethnic Fractionalization," Energy Economics, Elsevier, vol. 102(C).
    15. Simone Salotti, 2012. "Wealth Effects in the US: Evidence from the Combination of Two Surveys," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 67-98.
    16. Rodriguez-Alvarez, Ana & Llorca, Manuel & Jamasb, Tooraj, 2021. "Alleviating energy poverty in Europe: Front-runners and laggards," Energy Economics, Elsevier, vol. 103(C).
    17. Rafi, Muhammed & Naseef, Mohemmad & Prasad, Salu, 2021. "Multidimensional energy poverty and human capital development: Empirical evidence from India," Energy Economics, Elsevier, vol. 101(C).
    18. Juan Contreras & Joseph B. Nichols, 2010. "Consumption responses to permanent and transitory shocks to house appreciation," Finance and Economics Discussion Series 2010-32, Board of Governors of the Federal Reserve System (U.S.).
    19. Shaar, Karam, 2019. "Essays on modern economic issues in international trade, exchange rates and housing," Working Paper Series 8039, Victoria University of Wellington, School of Economics and Finance.
    20. Atif Mian & Amir Sufi, 2014. "House Price Gains and U.S. Household Spending from 2002 to 2006," NBER Working Papers 20152, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Prospect theory; Mental accounting; Behavioural economics; Energy consumption; Housing wealth; Judgemental bias;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

    Statistics

    Access and download statistics

    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:enepol:v:143:y:2020:i:c:s0301421520303219. 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/enpol .

    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.