Timing is Everything: Poverty Alleviation and the Demand for Energy-Using Assets
RFF Academic Seminar
Associate Professor, Haas School of Business, UC Berkeley
Thursday, November 18, 2010
2 - 3:30 p.m.
7th Floor Conference Center
1616 P St. NW
Washington, D.C. 20036
Over the next several decades, economic development and anti-poverty programs will likely lift the incomes of the world’s poor. In this paper, we study the implications for energy use, focusing on the accumulation of energy-using assets. We begin by developing a simple model of household asset accumulation as a function of income when consumers are credit constrained. We show that households are more likely to give up consumption of non-durables, such as food, in order to acquire durables, such as refrigerators, when transfers are lumpy or income growth is fast. We find empirical support for this model using data from Oportunidades, the Mexican conditional cash transfer program that began in 1998. Specifically, among households that received the same level of cumulative transfers, we find fewer refrigerators purchased by those that were randomly selected to begin receiving the transfers earlier, suggesting that they have accumulated the transfers over a longer time period. We go on to show that income has a negligible effect on energy use conditional on asset ownership, confirming that the main driver of increased energy use among poor Mexicans has been the accumulation of energy-using assets. Our results have implications for evaluating the effects of the timing of transfer payments and for considering the effects of income growth on energy use.
All seminars will be in the 7th Floor Conference Room at RFF, 1616 P Street NW. Attendance is open, but involves pre-registration no later than two days prior to the event. For questions and to register to an event, please contact Juha Siikamäki at firstname.lastname@example.org (tel. 202-328-5157) or Daniel McDermott at McDermott@rff.org (tel. 202-328-5174). Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.