Locus of control and energy poverty

Abstract

We examine the impact of locus of control (LoC) on energy poverty. Using 15 waves of longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) survey and a supplementary dataset that collects information on household energy choices, we examine the direct effects of LoC on subjective and objective indicators of energy poverty. We also examine the role of savings, gambling behaviour, trust and household energy choices as potential channels through which LoC transmits to energy poverty. We find that being more internal on LoC is associated with a lower likelihood of being energy poor. Specifically, a one standard deviation increase in being more internal on LoC is associated with a 0.028 standard deviation decline in the probability of being energy poor as defined by the low-income high-cost measure of energy poverty and a 0.125 standard deviation decline in the probability that one is unable to heat their home. We find that savings, gambling behaviour, social capital and being proactive in installing energy-saving lighting and not leaving the lights on in the house throughout the day are channels through which LoC influences energy poverty.