Analysis on the Changes of Household Electricity Consumption over the Past Three Decades

Abstract

This study uses the Blinder-Oaxaca decomposition to investigate what are the main reasons that contribute to the changes of household electricity con- sumption. The household data in Taiwan over the period 1985-2015 are used. The empirical results indicate that the changes of household electricity con- sumption are driven by different factors across these three decades. The in- crease in household electricity consumption is mainly attributed to the changes in the coefficients effect of the determinants. In particular, the coeffi- cients effect of household size plays the most important role. The declining of household size leads to electricity consumption per capita increases due to the loss of economies of scale. As for the contribution of the endowments effect, the number of air condition and household income are the most important factors. Moreover, the coefficients effect of household size is crucial both for high-income and low-income households. Therefore, the policy implication means that the electricity pricing policy should take household size into con- sideration so as to offer electricity-saving incentives for households with smaller family size. Besides, some strategies, such as improving energy effi- ciency of appliances and providing the subsidy for the investment in ener- gy-efficient appliances, should have a higher priority. Keywords