Residential energy demand: additional empirical evidence by minority household type

Abstract

In a number of recent studies household level data for specific urban areas or national household level micro-data have been used to estimate price and income elasticities of energy demand. None of this literature, however, provides us with elasticity estimates by minority/majority household type. The main focus of this paper is to measure the responsiveness of the quantity of electricity and total energy demanded for Black, Hispanis, and Majority households to price and income. Price and income elasticities are compared among these groups over the short and long term. A variable elasticity demand model is estimated. The elasticities are allowed to vary with respect to non-price and income variables. The price elasticities of demand vary with heating and cooling degree days and the income elasticities with the number of household members. Mean estimates were calculated over the respective samples. Findings indicate that demand for electricity is relatively price inelastic irrespective of household group. However, Blacks are more sensitive to variations in the short run to price than Hispanic and Majority households. In the long run, Blacks are also more sensitive to price changes but the magnitude of the response to price changes in the long run relative to the short run is larger for Hispanics and Majority households respectively than for Blacks.