The Demand for Energy-Using Assets among the World's Rising Middle Classes
Paul J. Gertler, Orie Shelef, Catherine D. Wolfram, Alan Fuchs
American Economic Review · 2016 · Volume 106 · Issue 6
Abstract
We study household decisions to acquire energy-using assets in the presence of rising incomes. We develop a theoretical framework to characterize the effect of income growth on asset purchases when consumers face credit constraints. We use large and plausibly exogenous shocks to household income generated by the conditional-cash-transfer program in Mexico, Oportunidades, to show that asset acquisition is nonlinear, depends, as predicted in the presence of credit constraints, on the pace of income growth, and both effects are economically large among beneficiaries. Our results may help explain important worldwide trends in the relationship between energy use and income growth.
Keywords
Consumer Economics: Empirical Analysis, Measurement and Analysis of Poverty, Welfare, Well-Being, and Poverty: Government Programs, Provision and Effects of Welfare Programs, Microeconomic Analyses of Economic Development, Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products, Energy Forecasting
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