Adding fuel to fire? Social spillovers and spatial disparities in the adoption of LPG in India

The Indian population is still heavily reliant on solid biomass as a cooking fuel, especially in the rural areas, despite its negative health implications. Liquefied petroleum gas (LPG) is a clean alternative, but its higher cost implies that its use is often limited to the richer, urban areas of the country. This paper investigates whether social spillovers might play a role in a household’s decision to use LPG, how these effects vary across different subpopulations, and whether they exacerbate or ameliorate existing spatial disparities in LPG use. Using data from the National Sample Survey (NSS) and the India Human Development Survey (IHDS), this paper provides multiples strands of evidence, which when analysed in conjunction, suggest the presence of positive social spillovers. Hence, households are more likely to adopt LPG if other households residing in the same village or urban block do so. We find divergence in the strength of this effect between rural and urban households, with more persistent spillovers amongst rural households. We also find that spillovers are stronger in states that have previously had low rates of adoption, supporting the idea of an S-shaped pattern of technological adoption. Spillovers are also found to be stronger for households that are members of associations or social networks such as caste associations. Our results provide evidence on convergence in LPG use rates across subgroups of the Indian population, and have strong implications for policymakers who could leverage lessons from social learning to encourage consumers to switch to cleaner sources of energy in developing countries.