Household energy price resilience in the face of gas and electricity market crises

Abstract

Despite the provision of financial support by the Government in response to the recent energy crisis, the resilience of households to the ensuing high energy prices remains to be established. In this study we propose a new definition of resilience, specifically ‘energy price resilience’, and put forward an empirical approach to capture low energy price resilience (LENRES). We also assess its associated socio-economic and demographic factors using a representative UK panel. Using models that account for time-invariant unobserved heterogeneity, we further explore the association between LENRES and a rich set of health, disability, and wellbeing outcomes for adults and children through two fundamental routes: (1) the low energy and thermal affordability channel (LEA); and (2) the low energy and financial solvency channel (LES). We find that employment status, housing tenure, inability to save, energy prepayment methods, and household composition are systematic socio-economic correlates of LENRES. Moreover, LENRES is associated with worse health, disability, and wellbeing outcomes for adults; these associations are primarily driven by the LES component. On the other hand, in the case of children, LENRES at home is only systematically associated with life satisfaction, rather than general health. Our results suggest that targeted energy interventions could generate wider societal benefits.