Government

Liquidity Constraints And High Electricity Use

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Executive Summary

It is a well established fact that electricity use increases with income. What is less well known is that - despite the positive correlation between electricity use and income - a significant portion of low-income households consume very large amounts of electricity. In this paper, the authors make a first step towards better understanding this phenomenon. Specifically, they test the hypothesis that the high electricity use is driven by the fact that low-income households find it difficult to purchase heating oil upfront/in bulk and so use electricity to heat their homes.

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