When I was your age: Generational effects on long-run residential energy consumption in Italy

Abstract

Shifting consumption preferences are a crucial characteristic of ageing societies: the elderly and younger individuals tend to consume different sets of goods and services. Energy demand is no exception as several studies have shown that age matters in shaping the use of energy. Our work supports the finding that not only age but also the generation matters in defining energy use: each cohort is characterized by common experiences, aspirations and practices which define current and future consumption patterns. A recent strand of literature, the energy culture framework, is useful to explain the behaviour of different population cohorts regarding energy consumption and environmental protection. This paper aims to assess how ageing and evolving generational energy cultures may affect future energy consumption by considering expected changes in the population structure in terms of age, class and geographical location. We build a pseudo-panel of Italian households to separately estimate cohort and age effects by macro-area. Both electricity and natural gas use rise with the age of the householder and from older to younger generation. We then combine this with official demographic projections to assess the potential roles of age and cohort effects in energy consumption up to 2050. Our findings show that overlooking the effects of age and generations would result in a severe under-estimation of total energy demand in the future.