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Housing, Energy Cost, and the Poor: Counteracting Effects in Germany's Housing Allowance Program

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  • Peter Grösche

Abstract

Adequate housing and affordable warmth are essential human needs, the lack of which may seriously harm people's health. Germany provides an allowance to low-income households, covering the housing as well as the space heating cost, to protect people from the consequences of poor housing conditions and fuel poverty. In order to limit public expenditures, payment recipients are required to choose low-cost dwellings, with the consequence that they probably occupy flats with a poor thermal performance. Recipients are thus likely to have a higher energy consumption and energy expenditures. Using a large data set of German households, this paper demonstrates that this counteracting effect is of negligible magnitude. Yet, from an ecological perspective, the allowance scheme creates distorted incentives and should be reformed.

Suggested Citation

  • Peter Grösche, 2009. "Housing, Energy Cost, and the Poor: Counteracting Effects in Germany's Housing Allowance Program," SOEPpapers on Multidisciplinary Panel Data Research 202, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp202
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    References listed on IDEAS

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    1. Ira S. Lowry, 1960. "Filtering and Housing Standards: A Conceptual Analysis," Land Economics, University of Wisconsin Press, vol. 36(4), pages 362-370.
    2. Matias D. Cattaneo & Sebastian Galiani & Paul J. Gertler & Sebastian Martinez & Rocio Titiunik, 2009. "Housing, Health, and Happiness," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 75-105, February.
    3. Bradshaw, Jonathan & Hutton, Sandra, 1983. "Social policy options and fuel poverty," Journal of Economic Psychology, Elsevier, vol. 3(3-4), pages 249-266, September.
    4. Weicher, John C. & Thibodeau, Thomas G., 1988. "Filtering and housing markets: An empirical analysis," Journal of Urban Economics, Elsevier, vol. 23(1), pages 21-40, January.
    5. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
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    Cited by:

    1. Schaffrin, André & Reibling, Nadine, 2015. "Household energy and climate mitigation policies: Investigating energy practices in the housing sector," Energy Policy, Elsevier, vol. 77(C), pages 1-10.

    More about this item

    Keywords

    Housing Allowance; Energy Efficiency; Simultaneous-Equation System;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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