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Fuel poverty and financial distress
Andrew Burlinson1, Monica Giulietti2, Cherry Law3
1Norwich Business School, University of East Anglia, NR4 7TJ, UK.
Energy Economics
|October 4, 2021
Summary
Fuel poverty is strongly linked to current financial distress, especially subjective measures. This connection persisted during the COVID-19 pandemic, highlighting the need for policies addressing energy affordability.
Area of Science:
- Socioeconomics
- Public Health
- Energy Policy
Background:
- Governments and advocacy groups recognize the vulnerability of the fuel poor, defined as those lacking adequate energy services.
- Concerns exist regarding the fuel poor's capacity to cope with hardships exacerbated by the COVID-19 pandemic.
Purpose of the Study:
- To empirically investigate the relationship between fuel poverty and financial distress.
- To examine this relationship before and during the initial phase of the COVID-19 pandemic.
Main Methods:
- Utilized the Understanding Society (UKHLS, Wave 10) longitudinal, nationally representative survey data from the UK (January 2018-February 2020).
- Employed statistical methods to correct for potential endogeneity.
- Analyzed data pertaining to the first wave of the COVID-19 pandemic.
Main Results:
- A statistically robust link was found between fuel poverty indicators and self-reported current financial distress, with subjective measures showing stronger effects.
- Fuel poverty indicators had a limited impact on individuals' expectations of future financial situations.
- The study confirmed fuel poverty's contribution to financial distress during the first wave of the COVID-19 pandemic.
Conclusions:
- Fuel poverty is a significant factor contributing to current financial distress.
- Policies targeting fuel poverty should consider their indirect effects on financial well-being.
- Findings remain robust across various specification and sensitivity checks.
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