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Habits and rational behaviour in residential electricity demand

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  • Filippini, Massimo
  • Hirl, Bettina
  • Masiero, Giuliano

Abstract

Households make an investment analysis when buying new electrical appliances. Therefore, expectations about future electricity consumption may have an impact on current consumption and investment decisions. Dynamic partial adjustment models of residential electricity demand neglect rational consumer behaviour. In this paper we propose a model for residential electricity demand that allows for forward-looking behaviour. We estimate lead consumption models using two stages least squares fixed effects on a panel of 48 US states between 1995 and 2011. We find that expectations about future consumption have an impact on current consumption decisions. This novel approach may improve our understanding of the dynamics of residential electricity demand and the evaluation of the effects of energy policies.

Suggested Citation

  • Filippini, Massimo & Hirl, Bettina & Masiero, Giuliano, 2018. "Habits and rational behaviour in residential electricity demand," Resource and Energy Economics, Elsevier, vol. 52(C), pages 137-152.
    • Handle: RePEc:eee:resene:v:52:y:2018:i:c:p:137-152
    DOI: 10.1016/j.reseneeco.2018.01.002
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    4. Miroslava Knapková & Mariana Považanová, 2021. "(Un)Sustainability of the Time Devoted to Selected Housework—Evidence from Slovakia," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
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    6. Akihiro Otsuka, 2019. "Natural disasters and electricity consumption behavior: a case study of the 2011 Great East Japan Earthquake," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 887-910, October.
    7. Jiang, Ping & Li, Ranran & Liu, Ningning & Gao, Yuyang, 2020. "A novel composite electricity demand forecasting framework by data processing and optimized support vector machine," Applied Energy, Elsevier, vol. 260(C).
    8. Liu, Xiaorui & Sun, Tao & Feng, Qiang & Zhang, Di, 2020. "Dynamic nonlinear influence of urbanization on China’s electricity consumption: Evidence from dynamic economic growth threshold effect," Energy, Elsevier, vol. 196(C).
    9. Akihiro Otsuka, 2018. "Regional Determinants of Energy Efficiency: Residential Energy Demand in Japan," Energies, MDPI, vol. 11(6), pages 1-14, June.

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    More about this item

    Keywords

    Residential electricity; Partial adjustment models; Dynamic panel data models; Rational habits;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D99 - Microeconomics - - Micro-Based Behavioral Economics - - - Other
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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