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Dynamic Properties of Energy Affordability Measures

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  • Peter Heindl
  • Rudolf Schüssler

Abstract

Measures of affordability are applied in practice, e.g., to assess the affordability of energy services, water or housing. They can be interpreted as measures of deprivation in a specific domain of consumption. The large body of literature on affordability measure has little overlap with the existing literature on poverty measurement. A comprehensive assessment of the response of affordability measures as a result of changes in the distribution of income or expenditure is missing. This paper aims to fill this gap by providing a conceptual discussion on the ‘dynamics’ of energy affordability measures. Several types of measures are examined in a microsimulation framework to assess their dynamic properties. Our results indicate that some measures exhibit odd dynamic behavior. This includes measures used in practice, such as the low income/high cost measure and the double median of expenditure share indicator. Odd dynamic behavior is attributed to definitions made with respect to higher moments of the expenditure distribution. Definitions that rely on a percentage share of expenditure relative to income or an absolute or relative income poverty line fare well from a dynamic perspective.

Suggested Citation

  • Peter Heindl & Rudolf Schüssler, 2015. "Dynamic Properties of Energy Affordability Measures," SOEPpapers on Multidisciplinary Panel Data Research 746, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp746
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    References listed on IDEAS

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    More about this item

    Keywords

    affordability measure; energy poverty; fuel poverty;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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