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Price Elasticity of Electricity Revisited: A Meta-Analysis

Author

Listed:
  • Vojtech Sikl

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague)

  • Zuzana Irsova

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague)

  • Peter Kudela

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague)

  • Anna Kudelova

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague)

Abstract

This meta-analysis synthesizes 4,521 elasticity estimates drawn from 413 studies to examine the presence of publication and endogeneity bias in the literature. We coded over 100 study-level variables to assess how electricity consumers respond to price changes. Our results show that electricity demand is price inelastic, with an average short-run elasticity of -0.231 and average long-run elasticity of -0.532. However, after correcting for publication bias, the short-run elasticity declines in magnitude to -0.116, while the long-run elasticity adjusts to -0.303. Using Bayesian model averaging, we explore substantial heterogeneity in elasticity estimates. Factors such as declining tariff structures, demographic characteristics, fuel usage controls, daylight hours, and citation frequency significantly affect reported elasticities. In contrast, variables related to average and marginal electricity prices and time-of-use tariffs contribute minimally to the observed variation.

Suggested Citation

  • Vojtech Sikl & Zuzana Irsova & Peter Kudela & Anna Kudelova, 2025. "Price Elasticity of Electricity Revisited: A Meta-Analysis," Working Papers IES 2025/17, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Sep 2025.
    • Handle: RePEc:fau:wpaper:wp2025_17
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    File URL: https://ies.fsv.cuni.cz/en/price-elasticity-electricity-revisited-meta-analysis
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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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