Electricity Adoption and Lived Poverty: Evidence from Ethiopia

Afrobarometer recently introduced a measure known as “Lived Poverty,” which is a composite indicator assessing how often an adult member of a household has gone without enough food to eat, clean water for home use, medicines or medical treatment, fuel for cooking, or a cash income over the past year. In this paper, we investigate the relationship between household electricity adoption and the lived poverty of its members in rural Ethiopia. The analysis uses two rounds of the Afrobarometer surveys and employs endogenous switching regression (ESR). The results show that access to electricity significantly reduces both the prevalence of lived poverty and its intensity. Moreover, electricity adoption alleviates not only overall lived poverty but also its dimensions, including food insecurity. Furthermore, we find evidence that electricity access alleviates lived poverty by improving access to information, expanding financial inclusion, and increasing employment opportunities. Finally, the study identifies improved access to information, better housing conditions, and financial inclusion as key pathways to enhancing rural households’ adoption of electricity.