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Sweating the energy bill: Extreme weather, poor households, and the energy spending gap

Author

Listed:
  • Jacqueline Doremus

    (Department of Economics, California Polytechnic State University)

  • Irene Jacqz

    (IAI, Harvard University and Department of Economics, Iowa State University)

  • Sarah Johnston

    (Department of Agricultrual and Applied Economics, University of Wisconsin-Madison)

Abstract

We find energy spending disparities that indicate extreme weather causes hardship for low-income households. Using the 2004-2018 U.S. Consumer Expenditure Survey, we estimate the relationship between temperature and energy spending separately for low-income and all other households. Both groups respond similarly -- in percentage terms -- to moderate temperatures, but low-income households' energy spending is half as responsive to extreme temperatures. We find similar disparities in the food spending response to extreme temperature, consistent with a credit constraints mechanism. These results suggest adaptation to extreme weather, such as air conditioning use, is prohibitively costly for low-income households.

Suggested Citation

  • Jacqueline Doremus & Irene Jacqz & Sarah Johnston, 2020. "Sweating the energy bill: Extreme weather, poor households, and the energy spending gap," Working Papers 2002, California Polytechnic State University, Department of Economics.
    • Handle: RePEc:cpl:wpaper:2002
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    References listed on IDEAS

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