The Free Electricity Allowance and the Engel Curve
In 1994 over 18 per cent of Irish households possessed a free electricity allowance. This creates complications in using the 1994-95 Household Budget Survey to estimate an Engel curve for electricity expenditure. Ignoring the allowances leads to biased estimates of elasticities and distorts comparisons between sectors. Examining the sub-populations with and without allowances results in conclusions leading to a substantial revision of the income elasticity for household electricity expenditure and to deductions about possible current and past welfare losses inherent in the free electricity scheme.
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- Cantillon, Sara & Curtis, John & FitzGerald, John, 1994. "Medium-Term Review 1994-2000, No. 5," Forecasting Report, Economic and Social Research Institute (ESRI), number MTR05, December.
- Duffy, David & FitzGerald, John & Kearney, Ide & Shortall, Fergal, 1997. "Medium-Term Review 1997-2003, No. 6," Forecasting Report, Economic and Social Research Institute (ESRI), number MTR06, December.
- Conniffe, Denis & Scott, Susan, 1990. "Energy Elasticities: Responsiveness of Demands for Fuels to Income and Price Changes," Research Series, Economic and Social Research Institute (ESRI), number GRS149.
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