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Determining the efficiency of residential electricity consumption

Author

Listed:
  • Mark A. Andor

    (RWI – Leibniz Institute for Economic Research)

  • David H. Bernstein

    (University of Miami)

  • Stephan Sommer

    (RWI – Leibniz Institute for Economic Research)

Abstract

Increasing energy efficiency is a key global policy goal for climate protection. An important step toward an optimal reduction of energy consumption is the identification of energy saving potentials in different sectors and the best strategies for increasing efficiency. This paper analyzes these potentials in the household sector by estimating the degree of inefficiency in the use of electricity and its determinants. Using stochastic frontier analysis and disaggregated household data, we estimate an input requirement function and inefficiency on a sample of 2000 German households. Our results suggest that the mean inefficiency amounts to around 20%, indicating a notable potential for energy savings. Moreover, we find that household size and income are among the main determinants of individual inefficiency. This information can be used to increase the cost-efficiency of programs aimed to enhance energy efficiency.

Suggested Citation

  • Mark A. Andor & David H. Bernstein & Stephan Sommer, 2021. "Determining the efficiency of residential electricity consumption," Empirical Economics, Springer, vol. 60(6), pages 2897-2923, June.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:6:d:10.1007_s00181-020-01967-4
    DOI: 10.1007/s00181-020-01967-4
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    4. Bettina Chlond & Timo Goeschl & Martin Kesternich, 2022. "More Money or Better Procedures? Evidence from an Energy Efficiency Assistance Program," MAGKS Papers on Economics 202225, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Subal C. Kumbhakarⓡ & Emir Malikovⓡ & Christopher F. Parmeterⓡ, 2021. "Applications of efficiency and productivity analysis: editors’ introduction," Empirical Economics, Springer, vol. 60(6), pages 2657-2663, June.
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    7. Otsuka, Akihiro, 2023. "Industrial electricity consumption efficiency and energy policy in Japan," Utilities Policy, Elsevier, vol. 81(C).
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    More about this item

    Keywords

    Household electricity consumption; Stochastic frontier analysis; Technical efficiency;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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