household electricity demand revisited respond to price changes this paper develops a model for evaluating the effects of alternative tariff designs on electricity use the model concurrently addresses several interrelated difficulties posed by nonlinear pricing heterogeneity in consumer price sensitivity and consumption aggregation over appliances and time we estimate the model using extensive data for a representative sample of 1300 california households the results imply a strikingly skewed distribution of household electricity price elasticities in the population with a small fraction of households accounting for most aggregate demand response we then estimate the aggregate and distributional consequences of recent tariff structure changes recent efforts to restructure electricity markets have renewed interest in electricity demand and pricing this interest reflects a broad desire to improve the efficiency of electricity markets and policy makers concerns over the impact of price changes on consumers how new pricing mechanisms would affect households consumption and expenditures is a matter of considerable uncertainty however this uncertainty has provoked controversy and debate in the regulatory policy arena hampering market reforms using econometric methods to assess the effects of electricity price changes presents several challenges these include the nonlinear structure of tariff schedules aggregation of metered consumption behaviour over time and appliances and the interdependence of energy use with longer term household decisions over appliance ownership and dwelling characteristics the first two issues introduce complex simultaneity problems between marginal prices and consumption the third issue imposes high data requirements information on household specific appliance holdings and residence features and creates heterogeneity in consumption responses related to the characteristics of these durable goods when the researcher s objective is to develop a model for simulating the effects of prospective tariff changes ignoring these issues will provide an incomplete assessment of demand responses and potentially misleading predictions of a new tariff s consumption and revenue consequences in this paper we estimate a model of household electricity demand that can be used

the cost of abating sulfur nitrogen and ozone air pollutants economists have a unique ability to get adversaries to stop attacking each other and turn their attention to the real problem the economist this is only appropriate since what economists enjoy most is attacking other economists as shown by a recent conference on the economics of acid rain mandelbaum economists continue to have this unique ability to unite lion and lamb against economists stauffer dunbar parker the economic estimates of benefits drew fire from all sides even the estimated costs of abatement made almost everyone unhappy because the economists claimed that important elements had been omitted while environmentalists and consumers deplored the focus on efficiency because equity got short shrift anyone who accepts a dollar estimate of either benefits or costs of air pollution abatement is a fool these dollar estimates are inherently arbitrary and economists can be expected to attack each estimate since so much is at stake the assumptions made in the analysis and current uncertainties give these estimates value only when seen in the context of the assumptions it is these uncertainties that i stress before quoting current dollar estimates more important this approach allows me to discuss the nature of the controversies

determinants of household electricity demand a two stage probit approach considerable interest on the part of policy makers in both the public and private sectors has spawned numerous studies of the determinants of residential electricity demand as a result of increased attention given to the possibility of adjusting household electricity consumption patterns through price manipulation as in the various peak load pricing experiments particular emphasis has been placed on obtaining an accurate estimate of the price elasticity of demand unfortunately ols applied to the conventional linear or log linear demand specification is biased and inconsistent when the sample includes households that face declining block rate schedules the inconsistency results from the fact that in the presence of declining block rates observed marginal price is a stochastic regressor that is negatively correlated with the regression error term some researchers have suggested that consistent ols estimation can be achieved by merely respecifying the demand equation to include particular combinations of marginal price average price rate of decline of the price schedule and real income corrected for intra marginal price differences 1 7 8 others realizing the futility of such an approach have developed and applied instrumental variable iv techniques 4 6 11 these iv methods however all involve an artificial linearization of the rate schedule which produces spurious negative correlation between the price variable and the random error term as a result such iv methods tend to overcompensate for actual correlation consequently the iv estimated coefficients of the various demand determinants will exhibit biases opposite in sign to those of their ols counterparts for example in the presence of declining block rates ols tends to overestimate the price elasticity of demand in absolute value while iv methods produce elasticity estimates that are downward biased a two stage probit tsp method developed by terza and welch 10 is not subject to the bias that plagues iv methods because tsp does not require a linear approximation to the rate schedule instead the discrete and discontinuous nature of household responses to declining block pricing is captured by incorporating an ordinal probit model that is based on a theory of consumer choice in the present paper a linear electricity demand model is estimated using the tsp ols and iv methods to demonstrate the effectiveness of the tsp method

optimal control of locusts in subsistence farming areas abstract locust swarms hit subsistence staple crop growing households at random and are not privately controllable an aerial spraying optimal control model that supports the said households livelihood at least expected cost is therefore developed the qualitative properties of the model are analysed under economically plausible but mild assumptions the steady state comparative statics reveal that the locust swarm size and the probability of a household s crop being destroyed by a swarm decrease with the number of households yield per household and the staple crop s replacement price and increase with the marginal cost of spraying and the planner s discount rate a local comparative dynamics analysis is also conducted as it provides the necessary economic intuition behind other ostensibly anomalous steady state comparative statics results

social cost of co2 abatement from energy efficiency and solar power in the united states frequently cited empirical analyses ask whether we should make the transition from reliance on fossil fuels to reduce greenhouse gas emissions and conclude that the transition is too costly so we should instead focus policy on how to adapt to global warming this paper makes two improvements in the analysis first this empirical analysis accounts for existing low cost alternatives that are substitutes for fossil fuels second this empirical analysis incorporates existing estimates of externalities from fossil fuels these two basic improvements in the analysis alter the conclusion policy should focus on how rapidly and extensively to make the transition from reliance on fossil fuels to the alternatives the corollary is that we should focus on the efficacy and cost of policy options that are designed to accomplish the transition

structural changes in residential electricity demand abstract the purposes of this study are to investigate the structural changes in residential electricity demand parameters and explain the causes for such changes a dynamic model is specified and estimated using pooled time series and cross section state level data for the usa changes in demand parameters over time are examined by using successive over lapping ten year sample periods for data from 1955 78 for parameter estimation the results show that there have been significant structural changes in demand elasticities for several independent variables these changes can be best explained by changes in household stocks of major electric appliances as new technologies have been developed improved and ingrained in consumer lifestyles and preference functions over time further inquiry shows no strong evidence of structural changes associated with either the reversal of the declining trend of electricity prices or the 1973 oil embargo however more data after the oil embargo may be needed to validate the existence of price asymmetries in electricity demand

renewable electricity policies heterogeneity and cost effectiveness abstract renewable electricity policies promote investment in renewable electricity generators and have become increasingly common around the world because of intermittency and the composition of other generators in the power system the value of certain renewable particularly wind and solar varies across locations and technologies this paper investigates the implications of this heterogeneity for the cost effectiveness of renewable electricity policies a simple model of the power system shows that renewable electricity policies cause different investment mixes policies also differ according to their effect on electricity prices and both factors cause the cost effectiveness to vary across policies we use a detailed long run planning model that accounts for intermittency on an hourly basis to compare the cost effectiveness for a range of policies and alternative parameter assumptions the differences in cost effectiveness are economically significant where broader policies such as an emissions price outperform renewable electricity policies

a new look at residential electricity demand using household expenditure data the recent push for a federal energy policy that could substantially change electricity prices in the u s highlights the need to obtain accurate residential electricity demand estimates many electricity demand estimates have been obtained based on the assumption that consumers optimize with respect to known marginal prices but increasing empirical evidence suggests that consumers are more likely to respond to average prices under this assumption this paper develops a new strategy based on gmm to estimate household electricity demand our approach allows a national level demand estimation from publicly available expenditure data and utility level consumption data complementing studies that use individual billing data which are richer yet often proprietary we estimate the price elasticity near 1 which is at the upper end in magnitude among the estimates from previous studies we apply our elasticity estimates in a u s climate policy simulation to determine how these elasticity estimates alter consumption and price outcomes compared to the more conservative elasticity estimates commonly used in policy analysis

electricity demand for south korean residential sector abstract this study estimates the electricity demand function for the residential sector of south korea with the aim of examining the effects of improved energy efficiency structural factors and household lifestyles on electricity consumption in the study time series data for the period from 1973 to 2007 is used in a structural time series model to estimate the long term price and income elasticities and annual growth of underlying energy demand trend uedt at the end of the estimation period the result shows a long term income elasticity of 1 33 and a long term price elasticity of 0 27 with 0 93 as the percentage growth of uedt at the end of the estimation period this result suggests that in order to encourage energy efficiency in the residential sector the government should complement the market based pricing policies with non market policies such as minimum energy efficiency standards and public enlightenment

the residential demand for electricity in australia an application of the bounds testing approach to cointegration this paper reports estimates of the long and short run elasticities of residential demand for electricity in australia using the bounds testing procedure to cointegration within an autoregressive distributive lag framework in the long run we find that income and own price are the most important determinants of residential electricity demand while temperature is significant some of the time and gas prices are insignificant our estimates of long run income elasticity and price elasticity of demand are consistent with previous studies although they are towards the lower end of existing estimates as expected the short run elasticities are much smaller than the long run elasticities and the coefficients on the error correction coefficients are small consistent with the fact that in the short run energy appliances are fixed

a national micro data based model of residential electricity demand new evidence on seasonal variation building on earlier estimates of electricity demand the author estimates elasticities by month to determine differences between heating and cooling seasons he develops a three equation model of residential electricity demand that includes all the main components of economic theory the model generates seasonal elasticity estimates that generally support economic theory based on the model using a national current household data set monthly division the evidence indicates there is a seasonal pattern for price elasticity of demand while less pronounced there also appears to be seasonal patterns for cross price elasticity of alternative fuels for the elasticity of appliance stock index and for an intensity of use variable

energy demand with declining rate schedules an econometric model for the u s commercial sector we specify and estimate a model of the demand for electricity and natural gas in commercial buildings using data from the commercial building energy consumption survey although not observed declining rate schedules are approximated by a downward sloping function fitted to billing data for individual survey units marginal prices rates temperature variables and a large number of building characteristics are incorporated into the model as explanatory variables demand and rate schedule equations constitute a simultaneous system with prices and quantities jointly determined the effects on price elasticities of using endogenous marginal rather than exogenous average prices are estimated to be quite large

electricity demand in multi family renter occupied residences this paper focuses on multi family renter occupied housing where the landlord provides major appliances a large residential sector that has not received widespread attention in the literature experimental data are used from a test where one group of households was billed directly for the electricity they consumed while a control group had unlimited electric service included as part of the monthly rent the empirical analysis yields short run demand estimates that satisfy to a remarkable extent the ceteris paribus assumptions of demand analysis this is the case for two reasons 1 the households did not individually execute the appliance choice decision at various unknown times in the past and 2 the stock of appliances upon which the derived short run demand is conditional is identical for all households in the sample a second important feature is emphasis on functional form examined in some detail is the question of the appropriate functional form for residential electricity demand finally empirical results of the analysis are used to investigate the cost effectiveness and welfare effects of installing submeters in existing multi family residences

consistent estimation of the impact of tax deductibility on the level of charitable contributions when charitable contributions are tax deductible the marginal price of charitable giving in other consumption foregone per dollar of contributions is generally less than unity further if the income tax schedule is a progressive step function the marginal price of contributions is generally a rising step function of the level of contributions the problem of estimating a contributions demand function for individuals is therefore complicated by the spurious correlation between the level of contributions and the observed marginal price we take this econometric problem into account in estimating a contributions demand function using data from the 1972 73 consumer expenditure survey after comparing our results with those of estimation techniques used by other authors we provide evidence on the impacts of alternative tax policies on charitable giving using our estimates of the model parameters

model of household electricity conservation behavior in this paper the authors develop a model that explains household choice of electricity conservation modes the model is based on the premise that households will adopt those conservation modes that yield benefits greater than perceived costs they find that households differ in the conservation modes they adopt high income households are more likely to adopt expenditure intensive methods while low income households are more likely to adopt time intensive conservation methods the results suggest a possible explanation as to why high income families and residents of single detached homes are observed to save the largest absolute amount of energy a popular explanation is that these households consume the most energy and thus would be most likely to benefit the authors suggest an alternative explanation 37 references 4 tables

appliance specific electricity consumption in slovene households abstract on the basis of a national household survey carried out in 1983 this study presents estimates of electricity use per appliance our estimates of electricity use for space heating water heating and cooking are considerably lower than the engineering estimates the estimates for other electricity using appliances broadly conform with engineering estimates our low estimate of the short run income elasticity is in close agreement with other studies

the short run residential demand for electricity the model of short run residential demand for electricity combines price schedule information obtained from the federal energy regulatory commission with household specific data from the 1972 73 consumer expenditure survey to determine the household s level of electricity consumption and relate it to the household s demographic profile and appliance stock the overall short run price elasticity estimate of 0 550 supports existing findings that short run residential electricity demand is price inelastic however the variation in elasticities across end use categories suggests that the overall response is made up of a complex set of responses that vary substantially and significantly across appliances this implies that it may be more efficient to tailor conservation policies to the stock configuration of the population 17 references 6 tables

the economic threshold with a stochastic pest population a real options approach using real options this paper formulates an optimal stopping model for applying pest control measures when the density of a pest population varies randomly a delay between successive pesticide applications is introduced to analyze the farmer s expected marginal cost of reentry this model is applied to the control of a foliar pest of apples via a pesticide and solved numerically a sensitivity analysis shows that the pest density that should trigger pesticide use can vary significantly with the pest density volatility incorporating pest randomness into simple decision rules may thus help better manage the chemicals applied to soils and crops

environmental regulation of households an empirical review of economic and psychological factors abstract the literature on sustainable consumption and environmental regulation of household behavior is dominated by conceptual and normative approaches as a result many suggestions lack a firm empirical basis to overcome this deficiency econometric studies in three areas of environmentally relevant activities of households are reviewed residential use of energy generation of solid waste and recycling and residential use of water next to price and income elasticities attention is devoted to individual socio economic features and psychological factors such as attitudes knowledge perceptions and values potential psychological determinants and related insights are further examined by discussing a range of representative and illustrative statistical psychological studies of environmental behavior one important general finding is that there are very few empirical studies that systematically combine socio economic and psychological determinants a range of insights for environmental policy is derived and research recommendations are offered

the estimation of short run household electricity demand using pooled aggregate data short run household electricity demand has been estimated with conditional demand models by a variety of authors using both aggregate data and disaggregate data disaggregate data are most desirable for estimating these models however in many cases available disaggregate data may be inappropriate furthermore disaggregate data may be unavailable altogether in these cases readily available aggregate data may be more appropriate this article develops and evaluates an econometric technique to generate unbiased estimates of household electricity demand using such aggregate data

residential demand for electricity under inverted block rates evidence from a controlled experiment block rate structures are used extensively in public utility pricing including residential electricity estimating price elasticities in this context is complicated by the resulting nonlinearity of the consumer s budget constraint this article estimates the demand for electricity under inverted block rates using data from a residential rate experiment the study provides an opportunity to obtain short run price elasticities in an experimental setting and to compare alternative estimators developed for nonlinear budget constraints elasticities of demand with respect to individual components of the block rate are developed using a modification of the structural maximum likelihood estimator

residential demand for electricity the case of greece this paper examines the determinants of residential electricity consumption in greece over the period 1961 86 the paper presents first a brief description of the evolution of residential electricity consumption then it proceeds in the estimation of elasticities of residential demand for electricity using a single equation model with the ridge regression method the paper concludes that i the residential demand for electricity is price inelastic and income elastic ii there is high substitutability between electricity and lpg iii during the examined period the number of consumers played a very important role in the expansion of electricity consumption in greece and iv there is no regional variation in residential electricity demand

instrumental variables approach to rural water service demand interest in empirical studies of the demand for goods sold through discrete pricing structures has grown since nordin suggested a modification of taylor s demand model 24 29 the bulk of early empirical research centered on residential electricity demand however econometric studies of water demand have proliferated in recent years some articles have been concerned in part with the proper theoretical specification of demand equations incorporating block rate pricing schedules taylor specified price as being composed of the marginal price associated with the block in which consumption occurs and an average price 29 nordin modified taylor s specification by demonstrating utility maximizing consumers with perfect information respond to marginal price along with a lump sum income effect associated with intramarginal prices and price schedule breakpoints 24 there is a potential problem in the estimation of demand for goods sold through block rate pricing schemes because of the possibility of correlation between price variables and the error structure 29 there are then two issues associated with the study of demand for goods sold under discrete pricing mechanisms the first issue is whether if consumers are aware of block pricing structures and respond to marginal price and the lump sum income change or rate premium or are aware of only total spending and total consumption and respond to an average price 11 5 9 26 the second issue is the choice of estimating technique 4 14 20 31 25 these two issues are not unrelated since empirical validation of consumer behavior

the economics of reentry regulation of pesticides government agencies frequently try to protect the public from industrial hazards by separating the two in time and or space this paper develops a methodology for one such policy reentry regulation of pesticides re entry regulation is shown to provide a rational incentive for preventive applications of pesticides a practice usually attributed to risk aversion or inadequate information the tradeoffs between farm worker poisonings and lost grower revenue are shown to be substantial weather dependent location specific reentry regulation appears superior to the uniform regulation now in effect

regulatory preferences and two part tariffs the case of electricity the purpose of this paper is to develop and demonstrate a method for deriving and testing regulatory preferences within and across customer classes and to assess the impact of these preferences on price structures and regulatory effectiveness in the electric utility industry the method extends a technique described in both nelson and ross for uncovering interclass preferences in a uniform price framework 24 33 34 by employing a two part tariff framework the extension enables the derivation of both interclass and intraclass preferences intraclass preferences can be derived in a two part tariff framework because regulators can discriminate not only between customer classes as with uniform prices but also within a customer class two part tariffs are also introduced because actual price structures in the electric utility industry are better approximated by two part tariffs than by uniform prices models of optimal two part tariffs particularly those of schmalensee and sherman and visscher are extended to allow regulatory preferences to vary across and within heterogeneous customer classes 36 37 13 27 11 25 19 18 22 2 these variable preferences are incorporated into a weighted social surplus function which regulators are assumed to maximize given this model of regulatory behavior preference weights can be derived for the electric utility industry with information on the markups of both per unit prices over marginal costs of kwh output and fixed charges over the marginal costs of customer connection and on output and connection demand elasticities

measuring the marginal cost of nonuniform environmental regulations a method is presented for measuring the marginal welfare cost of environmental regulations affecting agriculture the method incorporates output market effects and recognizes diversity in production conditions among crops regions and seasons an important advantage of the method is that only regional outputs and changes in regional production costs are needed to calculate deadweight loss thus simplifying the measurement of welfare changes this feature of the model is significant since the complexity and substantial data requirements of most existing impact models cause many environmental regulations to be enacted with inadequate analysis of their economic impacts the method also disaggregates welfare impacts by crop place and time thus encouraging the implementation of nonuniform interventions that achieve a given level of environmental quality more efficiently than uniform policies

a model of individual household temperature demand and energy related welfare changes using satiety abstract a model of the utility maximizing household is developed in which data on satiety levels for indoor temperature can be used along with budget constraint parameters and actual temperature choices to estimate parameters of the utility function using the utility parameters equivalent variations in income can be estimated to measure welfare effects of policy and price changes that effect home heating all of these operations can be performed at the individual household level and for any member of a popular class of utility function forms the required data are easy to obtain although they typically are not collected in household surveys

differentiated regulation the case of auto emissions standards this paper presents an analysis of automotive emissions regulation that explicitly considers the link between regulation and the composition of the vehicle stock the adoption of more stringent emissions standards for new vehicles is shown to prolong the retention of old high emission rate vehicles in the fleet for this reason tighter new source standards actually increase aggregate emissions in the short run this result is of general as well as specific interest given the widespread use of differentiated regulatory tools incorporating a bias against new sources in many regulatory programs 3 references 1 table