Affordability measure , energy poverty , fuel poverty
Abstract:
Measures of affordability are applied in practice, e.g., to assess the affordability of energy
services, water or housing. They can be interpreted as measures of deprivation in a
specific domain of consumption. The large body of literature on affordability measure has
little overlap with the existing literature on poverty measurement. A comprehensive
assessment of the response of affordability measures as a result of changes in the
distribution of income or expenditure is missing. This paper aims to fill this gap by
providing a conceptual discussion on the ‘dynamics’ of energy affordability measures.
Several types of measures are examined in a microsimulation framework to assess their
dynamic properties. Our results indicate that some measures exhibit odd dynamic
behavior. This includes measures used in practice, such as the low income/high cost
measure and the double median of expenditure share indicator. Odd dynamic behavior is
attributed to definitions made with respect to higher moments of the expenditure
distribution. Definitions that rely on a percentage share of expenditure relative to income
or an absolute or relative income poverty line fare well from a dynamic perspective.
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