Real-time feedback and residential electricity consumption: The Newfoundland and Labrador pilot

A pilot study was undertaken in Newfoundland and Labrador to determine whether provision of a real-time feedback device is sufficient to provide residential customers with the information needed to reduce their electricity consumption. A panel based econometric methodology, which controlled for such factors as weather, appliance and housing stock, and demographic determinants influencing electricity consumption, was used to quantify the impacts of the realtime monitor in reducing energy (kWh) use. The study also provided some important insights about socio-economic factors that influence conservation responsiveness, a feature that may assist in developing targeted energy efficiency programs. For example, the electric water heating households showed a higher savings than non-electric water heating households. While positive attitudes toward conservation significantly increase the reduction in electricity when using the real-time monitor, seniors, in their employment of the real-time monitor, do not conserve as much. Overall, the aggregate reduction in electricity consumption (kWh) across the study sample was 18.1%. The paper describes the experimental design, the data collection, the evaluation model, the conservation results, and customers' attitudes and perceptions regarding the real-time monitor

Aggregation Effects on Price and Expenditure Elasticities in a Quadratic Almost Ideal Demand System

While it is well known that demand elasticities calculated at the macro level will in general differ from those calculated at the micro level because of aggregation effects there remain the questions of how large the effects are, and how they vary with the degree of nonuniformity in the income distribution. We explore those questions with models based on a quadratic version of the Almost Ideal Demand System. We investigate the elasticity differences theoretically and then calibrate the models and generate numerical results, using income data for seven countries with widely different distributions. The aggregation effects are found generally to be rather small, even with highly nonuniform income distributions.demand elasticities; aggregation effects; quadratic almost ideal demand system

Aggregation and Other Biases in the Calculation of Consumer Elasticities for Models of Arbitrary Rank

Consumer-related policy decisions often require analysis of aggregate responses or mean elasticities. However, in practice these mean elasticities are seldom used. Mean elasticities can be approximated using aggregate data, but that introduces aggregation bias for full and compensated price elasticities, though interestingly not for expenditure elasticities. The biases corresponding to incorrect approximations of mean elasticities depend on the type of data (micro or aggregate), the type and rank of the model, and generalized measures of income inequality. These biases are distinct from the biases (already noted in the literature) when using aggregate data to estimate micro elasticites at mean income.Aggregate price and expenditure elasticities, aggregation bias, consumer demand, generalized measures of income inequality, income distribution

Taxing a Commodity With and Without Revenue Neutrality: An Exploration Using a Calibrated Theoretical Consumer Equilibrium Model

It has long been recognized that taxing a commodity that generates negative externalities can be used to reduce the consumption of that commodity. A variant involves the imposition of revenue neutrality but that may alter the tax rate required to meet a consumption reduction target. We explore the relationships among the commodity tax rate, the demand and supply elasticities, and the revenue offsets by calibrating a theoretical consumer equilibrium model and then recalibrating it with alternative parameter configurations. For each configuration we simulate equilibrium for three policy scenarios: no neutrality, neutrality achieved by subsidizing other commodities, and neutrality achieved by income transfer.Consumer Market Equilibrium; Commodity Taxation; Revenue Neutrality

Exploring the Effects of Aggregation Error in the Estimation of Consumer Demand Elasticities

Errors introduced by using aggregate data in estimating a consumer demand model have long been a concern. We study the effects of such errors on elasticity estimates derived from AIDS and QUAIDS models. Based on a survey of published articles, a generic parameterization of the income distribution, and the range of Gini coefficients reported for 28 OECD countries, we generate and analyse a large number of “observations” on the differences between elasticities calculated at the aggregate level and those calculated at the micro level. We suggest a procedure for evaluating the likely range of aggregation error when a model is estimated with aggregate data.Aggregation error; Consumer demand elasticities; AIDS/QUAIDS models; Income distribution

Exploring the Effects of Aggregation Error in the Estimation of Consumer Demand Elasticities

Errors introduced by using aggregate data in estimating a consumer demand model have long been a concern. We study the effects of such errors on elasticity estimates derived from AIDS and QUAIDS models. Based on a survey of published articles, a generic parameterization of the income distribution, and the range of Gini coefficients reported for 28 OECD countries, we generate and analyse a large number of “observations” on the differences between elasticities calculated at the aggregate level and those calculated at the micro level. We suggest a procedure for evaluating the likely range of aggregation error when a model is estimated with aggregate data.Aggregation error; Consumer demand elasticities; AIDS/QUAIDS models; Income distribution

Age, Retirement and Expenditure Patterns: An Econometric Study of Older Canadian Households

The paper explores the allocation of consumption expenditure by the older population among different categories of goods and services, and how expenditure patterns change with age within that population. Of particular interest is whether observed differences between pre-retirement and post-retirement patterns are a consequence of changes in "tastes" or reductions in income. An adapted form of the Deaton and Muellbauer Almost Ideal Demand System is estimated with data from six Family Expenditure Surveys and used to investigate that question. The findings suggest that observed changes in budget allocations are most closely related to reductions in income.consumption expenditure; retirement; income

Aggregation and other biases in the calculation of consumer elasticities for models of arbitrary rank

Consumer-related policy decisions often require analysis of aggregate responses or mean elasticities. However, in practice these mean elasticities are seldom used. Mean elasticities can be approximated using aggregate data, but that introduces aggregation bias for full and compensated price elasticities, though interestingly not for expenditure elasticities. The biases corresponding to incorrect approximations of mean elasticities depend on the type of data (micro or aggregate), the type and rank of the model, and generalized measures of income inequality. These biases are distinct from the biases (already noted in the literature) when using aggregate data to estimate micro elasticites at mean income

Taxing a commodity with and without revenue neutrality: An exploration using a calibrated theoretical consumer equilibrium model

It has long been recognized that taxing a commodity that generates negative externalities can be used to reduce the consumption of that commodity. A variant involves the imposition of revenue neutrality but that may alter the tax rate required to meet a consumption reduction target. We explore the relationships among the commodity tax rate, the demand and supply elasticities, and the revenue offsets by calibrating a theoretical consumer equilibrium model and then recalibrating it with alternative parameter configurations. For each configuration we simulate equilibrium for three policy scenarios: no neutrality, neutrality achieved by subsidizing other commodities, and neutrality achieved by income transfer

Biases in consumer elasticities based on micro and aggregate data: An integrated framework and empirical evaluation

Policy analysis frequently requires estimates of aggregate (or mean) consumer elasticities. However, estimates are often made incorrectly, based on elasticity calculations at mean income. We provide in this paper an overall integrated analytical framework that encompasses these biases and others. We then use empirically derived parameter estimates to simulate and quantify the full range of biases. We do that for alternative income distributions and four different demand models. The biases can be quite large; they generally grow as the degree of income inequality rises, the underlying expenditure elasticity differs from one, and the rank of the model increases