Impacts of income poverty and high housing costs on fuel poverty in Egypt: An empirical modeling approach

Abstract

Energy poverty is a new growing dimension of inequality in both developed and developing economies. Here, we develop an empirical model to examine the linkage between fuel poverty, income, and high housing costs in developing countries. Our analysis focuses on Egypt, a country that has undergone rapid development and significant energy reforms in recent years. Employing a probit and ordered multinomial framework to data from the Egyptian HIECS Survey, a nationally representative sample of both households and dwellings, we estimate the fuel, income, and housing cost-induced poverty extent and their key determinants. Our results show that households with low income, high energy, and high housing expenses represent approximately 16.4% of the total population, and 7.44% have low income, high energy, and low housing expenses. Our findings on critical factors driving LIHC poverty types (e.g., house type and family size) have some important policy implications for understanding the fuel poverty phenomenon and inequality reduction in Egypt, not only for the LIHC definition but also for any indicator of (fuel) poverty involving the posthousing (energy cost) concept.