Income and Energy Use in Bangladesh: A Household Level Analysis

Abstract

We examine how energy use at the household level moves with income growth in Bangladesh. Using the 2010 wave of Bangladesh Household Income and Expenditure Survey data, our analyses indicate a U-shaped relationship of both electricity use and other types of energy use (combined) with household consumption. The findings imply that as income grows, households increase their energy use less than proportionally up to a threshold. Energy use beyond the threshold increases at a higher rate than total consumption, particularly for electricity use. We identify the threshold (turning point) for both electricity and other types of energy use. Based on the current level of consumption and its growth, reaching at the turning point would require 17 years for the former category but only 7 years for the latter group.