An econometric analysis of U.S. residential electricity consumption.

Abstract

In this paper I use econometric analysis to analyze the variations in electricity consumption that occur between households with the same income and price for electricity. Robust estimation techniques are used in regressions where ‘behavioral’ variables are sequentially added. These variables account for a significant amount of the variation in energy consumption, reflecting that energy is used in a ‘non-rational’ sense. Looking at the difference between urban and rural households, I then show that rural households are not replacing their dishwashers and air-conditioning units with more efficient products, despite the same available federal aid programs. These results collectively suggest a limited utility for rational-agent energy models.