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Sweating the energy bill: Extreme weather, poor households, and the energy spending gap

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  • Jacqueline Doremus

    (Department of Economics, California Polytechnic State University)

  • Irene Jacqz

    (IAI, Harvard University and Department of Economics, Iowa State University)

  • Sarah Johnston

    (Department of Agricultrual and Applied Economics, University of Wisconsin-Madison)

Abstract

We find energy spending disparities that indicate extreme weather causes hardship for low-income households. Using the 2004-2018 U.S. Consumer Expenditure Survey, we estimate the relationship between temperature and energy spending separately for low-income and all other households. Both groups respond similarly -- in percentage terms -- to moderate temperatures, but low-income households' energy spending is half as responsive to extreme temperatures. We find similar disparities in the food spending response to extreme temperature, consistent with a credit constraints mechanism. These results suggest adaptation to extreme weather, such as air conditioning use, is prohibitively costly for low-income households.

Suggested Citation

  • Jacqueline Doremus & Irene Jacqz & Sarah Johnston, 2020. "Sweating the energy bill: Extreme weather, poor households, and the energy spending gap," Working Papers 2002, California Polytechnic State University, Department of Economics.
    • Handle: RePEc:cpl:wpaper:2002
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    Cited by:

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    2. Kay Jowers & Christopher Timmins & Nrupen Bhavsar & Qihui Hu & Julia Marshall, 2021. "Housing Precarity & the COVID-19 Pandemic: Impacts of Utility Disconnection and Eviction Moratoria on Infections and Deaths Across US Counties," NBER Working Papers 28394, National Bureau of Economic Research, Inc.
    3. Mao, Hui & Shi, Chaoqian & Tang, Heyan & Lu, Yufeng, 2024. "Time preferences and energy consumption of rural household in China," Energy Economics, Elsevier, vol. 132(C).
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    6. Lucas Cain & Danae Hernandez-Cortes & Christopher Timmins & Paige Weber, 2023. "Recent Findings and Methodologies in Economics Research in Environmental Justice," CESifo Working Paper Series 10283, CESifo.
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    8. Vincent P. Roberdel & Ioulia V. Ossokina & Vladimir A. Karamychev & Theo A. Arentze, 2023. "Energy-efficient homes: effects on poverty, environment and comfort," Tinbergen Institute Discussion Papers 23-082/V, Tinbergen Institute.
    9. Yuan, Zhengrong & Ding, Hai & Yu, Qiuzuo, 2024. "High temperature, bargaining power and within-firm wage inequality: Evidence from China," Economic Modelling, Elsevier, vol. 135(C).
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