IDEAS home Printed from https://ideas.repec.org/a/uwp/landec/v94y2018i2p259-283.html
   My bibliography  Save this article

Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases

Author

Listed:
  • Tomas Havranek
  • Zuzana Irsova
  • Tomas Vlach

Abstract

We present the first study that examines the effects of publication selection in the literature estimating the income elasticity of water demand. Paradoxically, more affected by publication selection are the otherwise preferable estimates that control for endogeneity. Attempting to correct simultaneously for publication and endogeneity biases, we find that the mean underlying elasticity is approximately 0.15 or less. The result is robust to controlling for more than 30 characteristics of the estimates and accounting for model uncertainty. The differences in the reported estimates are systematically driven by differences in the tariff structure, regional coverage, data granularity, and control for temperature.

Suggested Citation

  • Tomas Havranek & Zuzana Irsova & Tomas Vlach, 2018. "Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases," Land Economics, University of Wisconsin Press, vol. 94(2), pages 259-283.
  • Handle: RePEc:uwp:landec:v:94:y:2018:i:2:p:259-283
    Note: DOI: 10.3368/le.94.2.259
    as

    Download full text from publisher

    File URL: http://le.uwpress.org/cgi/reprint/94/2/259
    Download Restriction: A subscripton is required to access pdf files. Pay per article is available.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martin Feldkircher & Stefan Zeugner, 2012. "The impact of data revisions on the robustness of growth determinants—a note on ‘determinants of economic growth: Will data tell?’," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(4), pages 686-694, June.
    2. Havranek, Tomas & Irsova, Zuzana & Janda, Karel & Zilberman, David, 2015. "Selective reporting and the social cost of carbon," Energy Economics, Elsevier, vol. 51(C), pages 394-406.
    3. Fernando Arbués & Inmaculada Villanúa & Ramón Barberán, 2010. "Household size and residential water demand: an empirical approach ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 61-80, January.
    4. Piet Rietveld & Jan Rouwendal & Bert Zwart, 1997. "Estimating Water Demand in Urban Indonesia: A Maximum Likelihood Approach to block Rate Pricing Data," Tinbergen Institute Discussion Papers 97-072/3, Tinbergen Institute.
    5. Aaron Strong & V. Kerry Smith, 2010. "Reconsidering the Economics of Demand Analysis with Kinked Budget Constraints," Land Economics, University of Wisconsin Press, vol. 86(1), pages 173-190.
    6. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
    7. Koji Miyawaki & Yasuhiro Omori & Akira Hibiki, 2011. "Panel Data Analysis Of Japanese Residential Water Demand Using A Discrete/Continuous Choice Approach," The Japanese Economic Review, Japanese Economic Association, vol. 62(3), pages 365-386, September.
    8. Roseta-Palma, Catarina & Monteiro, Henrique, 2008. "Pricing for Scarcity," MPRA Paper 10384, University Library of Munich, Germany.
    9. S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
    10. R. Bruce Billings, 1982. "Specification of Block Rate Price Variables in Demand Models," Land Economics, University of Wisconsin Press, vol. 58(3), pages 386-394.
    11. Strand, Jon & Walker, Ian, 2005. "Water markets and demand in Central American cities," Environment and Development Economics, Cambridge University Press, vol. 10(03), pages 313-335, June.
    12. Steven Andrew Fenrick & Lullit Getachew, 2012. "Estimation of the effects of price and billing frequency on household water demand using a panel of Wisconsin municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 19(14), pages 1373-1380, September.
    13. J. E. Schefter & E. L. David, 1985. "Estimating Residential Water Demand under Multi-Part Tariffs Using Aggregate Data," Land Economics, University of Wisconsin Press, vol. 64(3), pages 272-280.
    14. Julie A. Hewitt & W. Michael Hanemann, 1995. "A Discrete/Continuous Choice Approach to Residential Water Demand under Block Rate Pricing," Land Economics, University of Wisconsin Press, vol. 71(2), pages 173-192.
    15. MICHAEL Nieswiadomy & STEVEN L. Cobb, 1993. "Impact Of Pricing Structure Selectivity On Urban Water Demand," Contemporary Economic Policy, Western Economic Association International, vol. 11(3), pages 101-113, July.
    16. Céline Nauges & Alban Thomas, 2003. "Long-run Study of Residential Water Consumption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 25-43, September.
    17. Schleich, Joachim & Hillenbrand, Thomas, 2009. "Determinants of residential water demand in Germany," Ecological Economics, Elsevier, vol. 68(6), pages 1756-1769, April.
    18. Williams, Martin, 1985. "Estimating urban residential demand for water under alternative price measures," Journal of Urban Economics, Elsevier, vol. 18(2), pages 213-225, September.
    19. Basani, Marcello & Isham, Jonathan & Reilly, Barry, 2008. "The Determinants of Water Connection and Water Consumption: Empirical Evidence from a Cambodian Household Survey," World Development, Elsevier, vol. 36(5), pages 953-968, May.
    20. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2014. "Estimation of Residential Water Demand with Imperfect Price Perception," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(4), pages 561-581, December.
    21. Henry S. Foster, Jr. & Bruce R. Beattie, 1979. "Urban Residential Demand for Water in the United States," Land Economics, University of Wisconsin Press, vol. 55(1), pages 43-58.
    22. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    23. Tomas Havranek & Zuzana Irsova & Dominik Herman, 2016. "Does Daylight Saving Save Energy? A Meta-Analysis," Working Papers IES 2016/24, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2016.
    24. Havranek, Tomas & Irsova, Zuzana & Janda, Karel, 2012. "Demand for gasoline is more price-inelastic than commonly thought," Energy Economics, Elsevier, vol. 34(1), pages 201-207.
    25. Shin, Jeong-Shik, 1985. "Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 591-598, November.
    26. Nauges, Celine & Strand, Jon, 2007. "Estimation of non-tap water demand in Central American cities," Resource and Energy Economics, Elsevier, vol. 29(3), pages 165-182, September.
    27. Theara Horn, 2011. "Welfare Effects of Access to Water Service in Cambodia," Economics Bulletin, AccessEcon, vol. 31(3), pages 2075-2089.
    28. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 1999. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," Working Papers 804, Princeton University, Department of Economics, Industrial Relations Section..
    29. Seung-Hoon Yoo, 2007. "Estimation of household tap water demand function with correction for sample selection bias," Applied Economics Letters, Taylor & Francis Journals, vol. 14(14), pages 1079-1082.
    30. Olmstead, Sheila M., 2009. "Reduced-Form Versus Structural Models of Water Demand Under Nonlinear Prices," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 84-94.
    31. Dinusha Dharmaratna & Jaai Parasnis, 2010. "Price Responsiveness of Residential, Industrial and Commercial Water Demand in Sri Lanka," Monash Economics Working Papers 44-10, Monash University, Department of Economics.
    32. Céline Nauges & Caroline Berg, 2009. "Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(4), pages 535-549, April.
    33. Diana Zigraiova & Tomas Havranek, 2016. "Bank Competition And Financial Stability: Much Ado About Nothing?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(5), pages 944-981, December.
    34. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
    35. Asci, Serhat & Borisova, Tatiana, 2014. "The Effect of Price and Non-Price Conservation Programs on Residential Water Demand," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170687, Agricultural and Applied Economics Association.
    36. Antonio Musolesi & Mario Nosvelli, 2007. "Dynamics of residential water consumption in a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 14(6), pages 441-444.
    37. Alexandros Polycarpou & Theodoros Zachariadis, 2013. "An Econometric Analysis of Residential Water Demand in Cyprus," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(1), pages 309-317, January.
    38. Havranek, Tomas & Kokes, Ondrej, 2015. "Income elasticity of gasoline demand: A meta-analysis," Energy Economics, Elsevier, vol. 47(C), pages 77-86.
    39. Arbues, Fernando & Villanu´a, Inmaculada & Barberán Ortí, Ramón, 2010. "Household size and residential water demand: an empirical approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), March.
    40. Ashenfelter, Orley & Harmon, Colm & Oosterbeek, Hessel, 1999. "A review of estimates of the schooling/earnings relationship, with tests for publication bias," Labour Economics, Elsevier, vol. 6(4), pages 453-470, November.
    41. Sylvestre Gaudin & Ronald C. Griffin & Robin C. Sickles, 2001. "Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form," Land Economics, University of Wisconsin Press, vol. 77(3), pages 399-422.
    42. Mark Hoffmann & Andrew Worthington & Helen Higgs, 2006. "Urban water demand with fixed volumetric charging in a large municipality: the case of Brisbane, Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 347-359, September.
    43. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2012. "Estimation of Residential Water Demand with Imprecise Price Perception," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201233, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    44. Saleth, R.M. & Dinar, A., 1997. "Satisfying Urban Thirst. Water Supply Augmentation and Pricing Policy in Hyderabad City, India," Papers 395, World Bank - Technical Papers.
    45. Mohamed Ayadi & Jaya Krishnakumar & Mohamed Salah Matoussi, 2002. "A Panel Data Analysis of Residential Water Demand in Presence of Nonlinear Progressive Tariffs," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 2002.06, Institut d'Economie et Econométrie, Université de Genève.
    46. T. D. Stanley, 2005. "Beyond Publication Bias," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 309-345, July.
    47. Michael L. Nieswiadomy & David J. Molina, 1989. "Comparing Residential Water Demand Estimates under Decreasing and Increasing Block Rates Using Household Data," Land Economics, University of Wisconsin Press, vol. 65(3), pages 280-289.
    48. Theo S. Eicher & Chris Papageorgiou & Adrian E. Raftery, 2011. "Default priors and predictive performance in Bayesian model averaging, with application to growth determinants," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(1), pages 30-55, January/F.
    49. Phoebe Koundouri, "undated". "Econometrics Informing Natural Resources Management:Selected Empirical Analyses," DEOS Working Papers 0401, Athens University of Economics and Business.
    50. Tomas Havranek & Zuzana Irsova, 2017. "Do Borders Really Slash Trade? A Meta-Analysis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(2), pages 365-396, June.
    51. David W. Carter & J. Walter Milon, 2005. "Price Knowledge in Household Demand for Utility Services," Land Economics, University of Wisconsin Press, vol. 81(2).
    52. Maamar Sebri, 2014. "A meta-analysis of residential water demand studies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(3), pages 499-520, June.
    53. repec:fth:prinin:425 is not listed on IDEAS
    54. R. G. Taylor & John R. McKean & Robert A. Young, 2004. "Alternate Price Specifications for Estimating Residential Water Demand with Fixed Fees," Land Economics, University of Wisconsin Press, vol. 80(3), pages 463-475.
    55. Chris Doucouliagos & T.D. Stanley, 2013. "Are All Economic Facts Greatly Exaggerated? Theory Competition And Selectivity," Journal of Economic Surveys, Wiley Blackwell, vol. 27(2), pages 316-339, April.
    56. Michael L. Nieswiadomy & David J. Molina, 1991. "A Note on Price Perception in Water Demand Models," Land Economics, University of Wisconsin Press, vol. 67(3), pages 352-359.
    57. Maamar Sebri, 2013. "Intergovernorate disparities in residential water demand in Tunisia: a discrete/continuous choice approach," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 56(8), pages 1192-1211, October.
    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. repec:cnb:ocpubv:rb16/1 is not listed on IDEAS
    2. Havranek, Tomas & Irsova, Zuzana & Zeynalova, Olesia, 2017. "Tuition Reduces Enrollment Less Than Commonly Thought," MPRA Paper 78813, University Library of Munich, Germany.
    3. repec:cnb:ocpubv:rb15/2 is not listed on IDEAS

    More about this item

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

    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:uwp:landec:v:94:y:2018:i:2:p:259-283. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://le.uwpress.org/ .

    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 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.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.