Equity and Energy: Rising Energy Prices and the Living Standards of Lower Income Americans.

Abstract

Arguing that the energy price policies of the 1970s represented a major equity/efficiency trade-off and led to a deterioration in the living standard of lower income households, the authors present a data-based assessment of the plight of these households from 1973-83. After a general review of the recessionary and inflationary impact of rising energy prices on the national economy, they assess three trends with adverse effects on lower income households: the rising share of energy expenditures as a percentage of household income and the failure of income transfer programs to offset losses in purchasing power; the rapid increase in energy-related operating costs and the decline in housing quality; the rapid increase in energy-related operating costs of local governments which led to a cutback in serivces and a shift toward regressive taxes. The authors conclude that the need for effective policy responses is greater now than in the first decade of the energy crisis. 246 references, 35 figures, 48 tables.