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Heterogeneity in price responsiveness for residential space heating in Germany

Author

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  • Hendrik Schmitz

    (RWTH Aachen University)

  • Reinhard Madlener

    (RWTH Aachen University)

Abstract

More than 80% of the energy expenditures of private households in Germany are spent on space heating and hot water preparation. This creates opportunities for policymakers trying to influence energy consumer behavior. However, for these measures to be effective and efficient, the factors that determine energy usage need to be known. In this paper, we identify the determinants of heating and hot water expenditures for German households, using a panel dataset derived from yearly residential household surveys covering the years 1996–2014. Furthermore, we test for heterogeneity between households using different methods. For the full sample, we find an own-price demand elasticity of heating expenditures ranging from 0.573 to 0.690. A large number of technical and socio-demographic factors are significant determinants of energy use. Additionally, we discover significant heterogeneity in price elasticity between different socioeconomic groups. Our findings have implications for evaluating the effectiveness of policy measures that target influencing energy use across different groups of consumers.

Suggested Citation

  • Hendrik Schmitz & Reinhard Madlener, 2020. "Heterogeneity in price responsiveness for residential space heating in Germany," Empirical Economics, Springer, vol. 59(5), pages 2255-2281, November.
    • Handle: RePEc:spr:empeco:v:59:y:2020:i:5:d:10.1007_s00181-019-01760-y
    DOI: 10.1007/s00181-019-01760-y
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    5. Singhal, Puja & Pahle, Michael & Kalkuhl, Matthias & Levesque, Antoine & Sommer, Stephan & Berneiser, Jessica, 2022. "Beyond good faith: Why evidence-based policy is necessary to decarbonize buildings cost-effectively in Germany," Energy Policy, Elsevier, vol. 169(C).
    6. Anders Rhiger Hansen & Daniel Leiria & Hicham Johra & Anna Marszal-Pomianowska, 2022. "Who Produces the Peaks? Household Variation in Peak Energy Demand for Space Heating and Domestic Hot Water," Energies, MDPI, vol. 15(24), pages 1-23, December.
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    8. Wang, Xia & Fang, Yuan & Cai, Weiguang & Ding, Chao & Xie, Yupei, 2022. "Heating demand with heterogeneity in residential households in the hot summer and cold winter climate zone in China -A quantile regression approach," Energy, Elsevier, vol. 247(C).
    9. Wang, Xia & Ding, Chao & Zhou, Mao & Cai, Weiguang & Ma, Xianrui & Yuan, Jiachen, 2023. "Assessment of space heating consumption efficiency based on a household survey in the hot summer and cold winter climate zone in China," Energy, Elsevier, vol. 274(C).
    10. Mats Kröger & Maximilian Longmuir & Karsten Neuhoff & Franziska Schütze, 2022. "The Costs of Natural Gas Dependency: Price Shocks, Inequality, and Public Policy," Discussion Papers of DIW Berlin 2010, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    Germany; Heating demand; Heating expenditures; Heterogeneity; Space heating;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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