The Household Appliance Stock, Income, and Electricity Demand Elasticity

Abstract

This paper estimates household electricity demand using data from the Energy Information Administration’s (EIA) 2015 Residential Energy Consumption Survey (RECS). Previous research has focused on estimating price elasticities, and we contribute to this literature by examining how price elasticity is impacted by household income and the appliance stock. Results show that as income increases, households rely less on electricity for space and water heating, but the number of electronic appliances increases with income. The changing stock suggests that the mechanism through which energy reduction occurs differs across income levels. The results can aid policymakers concerned about electricity demand, rising electricity rates, and the impact on low-income households. The results can also inform the design of demand response and demand side management programs.