UPDATE ON ECONOMETRIC STUDIES OF ENERGY DEMAND BEHAVIOR.

Abstract

The author reviews a number of relatively recent studies devoted to the modeling of energy demand behavior. A brief description is given of the individual studies and statistical results, organized according to consuming sector and type of demand model. On the basis of this review, the author presents general comparisons of model results. Overall, he finds that the studies covered in this paper use more sophisticated methods and better data than earlier empirical studies. However, our knowledge of demand behavior has not improved appreciably in the weakest areas. Commercial and industrial demand behavior remain largely in the dark, and additional analyses of the same aggregate level data are not likely to be illuminating. Estimates of price elasticities of demand for gasoline, residential electricity, and residential natural gas are more reliable and compare closely with the findings of earlier studies. The evidence suggests that the energy crisis has not caused an abrupt change in these elasticity parameters.