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The Effect of Reliability Improvements on Household Electricity Consumption and Coping Behavior: A Multi-dimensional Approach

Author

Listed:
  • Majid Hashemi
Abstract
This study analyzes the extent to which electricity consumers of different income levels would increase electricity consumption and change their coping behavior to deal with power outages in response to electricity reliability improvements. The empirical analysis is conducted in two steps: (1) using an unsupervised machine learning technique, a nationally representative sample of Nepalese households is segmented into similar clusters based on the reliability constraints they face; and, (2) using regression models, the impact of reliability improvements on consumption and coping decisions is estimated. The findings point out that improved reliability is positively correlated with the probability of electric appliance ownership. The interaction of income and reliability-constraint indicators suggests that the unreliable electricity supply constrains households equally at all income levels. Moreover, the results from an ordered probit model with three off-grid backup decision alternatives indicate no association between coping decisions and income in the first two income quintiles. In contrast, higher-income quintiles are associated with significant changes in coping behavior when reliable electricity is available from the grid. Putting this paper’s findings into an energy-policy perspective, a connection to the grid by itself does not necessarily translate to realized benefits from electricity consumption. The reliability of the service plays a critical role for households at all income levels.

Suggested Citation

  • Majid Hashemi, 2021. "The Effect of Reliability Improvements on Household Electricity Consumption and Coping Behavior: A Multi-dimensional Approach," Working Paper 1469, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1469
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1469.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Electricity demand; Electricity reliability; Coping behavior; K-means clustering analysis; Low-income countries;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis

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