The Effect of Social Behavior on Residential Water Consumption

Daniel Morales Martínez,Alexandre Gori Maia

doi:10.3390/w13091184

Daniel Morales Martínez, Alexandre Gori Maia

Open Access

https://doi.org/10.3390/w13091184

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Journal: Water	Publication Date: Apr 25, 2021
Citations: 5	License type: CC BY 4.0

Affiliation: Universidade Estadual de Campinas

Abstract

We analyze how residential water consumption is influenced by the consumption of households belonging to the same social group (peer effect). Analyses are based on household-level data provided by the Brazilian Household Budget Survey and use an innovative strategy that estimates the spatial dependence of water consumption while simultaneously controlling for potential sources of sample selectivity and endogeneity. The estimates of our quantile regression models highlight that, conditional on household characteristics, the greater the household water consumption, the greater the peer effect. In other words, the overconsumption of residential water seems to be influenced mainly by the behavior of social peers.

Highlights

Water demand has overgrown and placed increasing pressure on the limited global water supply suitable for human consumption [1]
The idea of using Ordinary least squares (OLS) estimators is to check to what extent these traditional estimates may be biased due to endogeneity and selectivity
Our main theoretical contribution is to highlight that social behavior is relevant to explain water consumption

Summary

Introduction

Water demand has overgrown and placed increasing pressure on the limited global water supply suitable for human consumption [1]. Population growth and income growth are critical factors for understanding water demand [4], social behavior plays a central role in individual demand [5]. The influence of peers on private goods consumption has gained increasing attention in the economics literature [6]. The classic studies by Schelling [7,8] highlight how regular or sporadic interactions with peers may influence individuals’ economic decisions. These interactions occur through social networks that generate externalities where a reference group’s decisions or actions affect individual preferences [9]. Prior studies have already shown spatial dependence patterns in water consumption [11], which may result from peer effects between consumption units in proximity to one another

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Conclusion