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# _3.C. Income and Government Assistance_

The HBS shows that the total income of households—a measure that includes salaries, cash income, as well as in-kind payments, subsidies and benefits—declined dramatically from 2014 to 2016. It recovered somewhat in 2017, and further improved in 2018 and 2019 (Figure 1).

One key piece of information is the HUS amount and any other assistance with energy bills received by the household.<sup>16</sup> Table 2 displays the percent of the sample that received HUS assistance (col. (1)) or “benefits” due to their professional or protected category status in each year (col. (2)).<sup>17</sup> The table shows that the HUS was bumped up significantly in 2016, and that in 2016-2018 a good half of the households received it. By contrast, the share of the sample entitled

> 16 The HUS reporting procedure changed somewhat over the different waves of the HBS. The 2014 and 2016 HBS, for example, provide detailed expenditure on each type of fuel (natural gas, liquified natural gas, solid fuels, heating oil) used in the home, district heating (if available), electricity, plus water and sewer, and the subsidies and “benefits” (i.e., “privileges”) received for each such item. The 2015 data set provides only housing-related expenditure, a much broader category that includes the abovementioned utilities, rent, cleaning expenses, and garbage removal fees. The 2017 and 2018 HBSs contain expenditure on each energy input or utility at a good level of detail, but only the total HUS (the Housing and Utility Subsidy), without breaking it down by utility type. To compute the exact HUS for each type of energy or utility, we follow the procedure of the Ukrainian government, which first computes the total HUS for a household based on the social norms and the household’s income, and then distributes it among the various utilities in strict proportion to each utility bill’s share out of total utility bills. This is done separately for the heating season (November-March), heating season shoulder months (April and October), and for the summer. We use the shares of the annual total bills to compute the portion of the HUS that applies to each utility. Since the share of the total utility bills accounted for by each of gas, electricity, water, sewer, and district heating is generally different across these the seasons, this is an approximate procedure. Simple calculations based on the examples provided by Ukrainian officials however suggest that this approximation yields figures that are very close to the true ones. For the 2017 and 2018 HBS, we proceed as follows. First, we compute what the total utility bills would have been, had there been no subsidies or benefits. Formally, full utility bills=∑ E + H B B B B , where expj denotes the expenditure (what the household actually paid, after the subsidies or benefits were KK jj=1 jj subtracted from the full utility bill) for utility j, and K is the total number of utilities. Next, focusing for example on EE HH+ those households that use piped natural gas, we recognize that gas bill=gas exp + HUSgas, and that HUSgas ≈( gas bill/full utility bills)∙HUS, which means that gas bill = gas exp/(1-HUS/full utility bills). We do the analogous calculations for district heating bills, water bills, sewer bills, and the bills for other types of fuels. Once the full bills have been computed, we can attribute the HUS to utility _j_ as HUSj ≈ HUS∙(bill for utility j/full utility bills).

> 17 Households on so-called benefits because of professional or social status receive discounts on the full tariffs of the utility. These discounts usually range from 25% to even 100%. The HBS reports the total amount of the benefits received (i.e., the total amount discounted off the bills). We use this information to infer the discount rate itself. If _p_ is the price per unit and _q_ the quantity consumed (e.g., m<sup>3</sup> of natural gas), and _d_ denotes the percent discount off the full tariff, then the payment will be _p_ ⋅(1- _d_ )⋅ _q_ , and _p_ ⋅ _d_ ⋅ _q_ will be reported as the benefit. This allows us to compute an approximate benefit discount rate as Benefits Received/(Benefits Received + Utility Payments).