A Top-Down Economic Efficiency Analysis of U.S. Household Energy Consumption

This study analyzes the efficiency of household-level energy consumption using a rich microdata set of homes within the United States. We measure efficiency by extending a cost-minimization model that treats the total amount of energy services produced as latent or unobserved due to technological di...

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Bibliographic Details
Published inThe Energy journal (Cambridge, Mass.) Vol. 39; no. 4; pp. 1 - 30
Main Authors Burnett, J. Wesley, Madariaga, Jessica
Format Journal Article
LanguageEnglish
Published Energy Economics Education Foundation 01.07.2018
International Association for Energy Economics
Sage Publications Ltd. (UK)
Subjects
Analysis
Economic efficiency
Energy consumption
Energy efficiency
Energy management
Energy management systems
Industrial efficiency
Planning
United States
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Summary:This study analyzes the efficiency of household-level energy consumption using a rich microdata set of homes within the United States. We measure efficiency by extending a cost-minimization model that treats the total amount of energy services produced as latent or unobserved due to technological differences in household consumption. The empirical strategy consists of applying latent class modeling to cost frontier analysis, which helps to identify heterogeneous subsets of units that require the fewest energy resources. Our estimates of efficient units form an empirical cost frontier of best practices within each subset. In order to understand the determinants of household-level energy efficiency, we condition the cost frontier analysis on numerous physical, climate-related, and socio-economic characteristics of the household. We find that state-level energy building code regulations, on average, induce a one-to-four percent marginal increase in household energy consumption.
ISSN:0195-6574
1944-9089
DOI:10.5547/01956574.39.4jbur