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The Well-Being Costs of Energy Poverty: The Role of Affective Channels

Author

Listed:
  • Emmanuel Asane-Otoo

    (University of Oldenburg, Department of Economics)

  • Abigail O. Asare

    (University of Oldenburg, Department of Economics)

Abstract

This paper examines the impact of energy poverty on subjective well-being in Germany using longitudinal data from the German Socio-Economic Panel (SOEP) over the period 2010–2023. Exploiting within-individual variation, we estimate fixed-effects models using objective, subjective, and composite indicators of energy poverty. Energy poverty is associated with a statistically significant and economically meaningful decline in life satisfaction, even after controlling for income, health status, and household characteristics. The negative association persists among households that are not income-poor, indicating that energy poverty constitutes a distinct dimension of material deprivation. Effects are strongest for subjective and multidimensional indicators, highlighting the importance of perceived energy deprivation and lived experience. Causal mediation analysis suggests that these well-being losses operate primarily through psychological and emotional channels. These findings imply that policies targeting energy affordability and housing efficiency may generate substantial welfare gains beyond income-based support.

Suggested Citation

  • Emmanuel Asane-Otoo & Abigail O. Asare, 2026. "The Well-Being Costs of Energy Poverty: The Role of Affective Channels," Working Papers V-455-26, University of Oldenburg, Department of Economics, revised Apr 2026.
    • Handle: RePEc:old:dpaper:455
    as

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    References listed on IDEAS

    as
    1. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    2. Awaworyi Churchill, Sefa & Smyth, Russell, 2021. "Energy poverty and health: Panel data evidence from Australia," Energy Economics, Elsevier, vol. 97(C).
    3. Bonsang, Eric & Klein, Tobias J., 2012. "Retirement and subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 311-329.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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