Figure 1 presents the average monthly energy expenditure at the household level based on USD across the 37 surveyed nations. The households in Singapore expend the most amount of energy, that is, 748 USD each month on average. The energy consumption appears positively associated with the economic development level; for example, households from high-income countries, including France, Italy, Japan and the US, tend to consume more energy than those from low-income countries (e.g., Kazakhstan, Myanmar, and Mongolia). In India, Indonesia, and Vietnam, households with higher income expend more on energy than rural/slum households. For the energy expenditure to household income ratio, strong trends were not found between developing and developed countries. Notably, middle-income countries (e.g., Greece, Chile, Brazil, Egypt) spend a relatively higher share of total income on energy.
Average monthly energy expenditure at the household level across the 37 surveyed nations. Data source: Original survey.
The relationship between subjective well-being and energy consumption expenditure based on the ordered logit, ordered probit, and OLS models is shown in Table 2, panel A. The LR Chi-Square test and Pseudo R-squared for the ordered logistic regression model and the ordered probit model were applied to measure the goodness of the fit, whereas F-statistics and adjusted R-squared were used for the OLS model. For the validation of the measurement of subjective well-being, life satisfaction and happiness measures were used. Importantly, the results from variated regression models are consistent, indicating a positive relationship between household energy consumption expenditure and the improvement of individuals’ subjective well-being. Regarding the model’s goodness of fit, the LR Chi-Square test with ordered logit and probit models, and the F-statistic in the OLS model are all statistically significant at 0.1%, which validates the regression model. As the consistency of the robustness results is derived from different models, the ordered logit model is applied in Table 2 (Panel B).
With the control variables being constant, energy consumption expenditure improves subjective well-being, including life satisfaction and happiness. The coefficients for the relationship of energy consumption with life satisfaction and with happiness are 0.018 and 0.008, respectively, and they are statistically significant at the 1% level; in other words, there is increased energy consumption for people who are satisfied with their lives and are happier. This is because electricity, water, gas, or gasoline are indispensable consumption goods in daily life. The results suggest that when policies lead to a reduction in the consumption of these goods at the household level, the life satisfaction of citizens is likely to decrease. When reducing energy consumption at the household level to reduce the emission of greenhouse gases, the conflicts of interest of individuals in these households (given that they derive life satisfaction from energy consumption) pose a challenge to policymakers; therefore, policymakers should devise strategies to improve both citizens’ living standards and environmental preservation.
Referring to the criteria developed by the World Bank, the standard classification of high-income nations and non-high-income nations is as follows. Based on the 2017 gross national income (GNI) per capita, the World Bank List of Economies (June 2018) presented the following criteria for nations to be classified as high-income and non-high-income nations, respectively: a GNI per capita of $12,056 or higher, and less than $12,056. According to this standard of classification, in this study, high-income nations comprise Japan, Singapore, Chile, Australia, the United States, Germany, the United Kingdom, France, Spain, Italy, Sweden, Canada, Netherlands, Greece, Hungary, Poland, and the Czech Republic, whereas non-high-income nations comprise Thailand, Malaysia, Indonesia, Vietnam, Philippines, Mexico, Venezuela, Brazil, Colombia, South Africa, India, Myanmar, Kazakhstan, Mongolia, Egypt, Russia, China, Turkey, Romania, and Sri Lanka.
Regarding the comparison of high- and non-high-income countries, energy consumption at the household level is more likely to lead to life satisfaction in non-high-income than in high-income countries. In high-income countries, the coefficients for the relationship of energy consumption with life satisfaction and with happiness are 0.010 and 0.003, respectively; these coefficients are 0.035 and 0.015, respectively, among non-high-income countries. Hence, in both high-income and non-high-income countries, an increase in energy consumption leads to an increase in life satisfaction; nonetheless, energy consumption is more crucial for households in non-high-income countries. Compared to the effect of energy consumption on satisfaction in high-income countries and non-high-income countries, individuals living in less urbanized countries appear more satisfied with energy consumption.
Table 3 presents the association between life satisfaction and energy consumption expenditure at the household level in each country by estimating Eq. (2) based on the ordered logit model for each country. There is a positive relationship between energy consumption expenditure and life satisfaction in 27 out of the 37 nations. For example, the coefficient of this relationship is 0.062 in Brazil, and is statistically significant at the 1% level. An increase in energy consumption expenditure positively impacts the life satisfaction of households in Brazil, meaning that individuals with greater energy expenditure tend to be satisfied with their lives. Similar results are found in other countries: Canada, Chile, China, Egypt, France, Germany, Greece, India, Indonesia, Italy, and Japan. As life satisfaction is a proxy of well-being, energy consumption is expected to increase when households can afford more energy to obtain higher life satisfaction. These results indicate that most of the developed and developing countries analyzed face a conflict of interest in addressing individuals’ life satisfaction and environment conservation goals; these countries include China and India that are home to large populations that have a positive desire for energy consumption.
However, the association between life satisfaction and energy consumption expenditure at the household level was non-significant across some countries. In Australia, the coefficient of this association is positive but not statistically significant; hence, an increase in energy expenditure is not completely associated with life satisfaction at the household level here. Similar results are found in the Netherlands, Hungary, Sweden, Singapore, Poland, the Czech Republic, and Colombia. In these countries, energy consumption is at an adequate level, and additional energy consumption does not lead to higher life satisfaction. It may be that households consume an adequate amount of energy with their income and energy price.
Tables 4, 5, 6, and 7 display the determinant factors of household energy consumption in 37 nations by estimating the energy demand equation for each country using Eq. (3). The key energy consumption metric is the quantity of energy consumed (e.g., kWh) across the targeted households. Since price information is limited, transforming consumption expenditure into a quantity (e.g., kWh) is problematic. As explained earlier, this study adopted the energy demand equation.
There are positive relationships between energy consumption expenditure at the household level and household income across countries. If the coefficients for household income are positive and statistically significant, this means that energy consumption expenditure at the household level would increase with an increase in household income ensuing from economic development in the country, ceteris paribus. The positive coefficients for the association between energy consumption expenditure and household income range from 0.756 (Japan) to 3.613 (the Philippines) in our sample, indicating that an additional 10,000 USD would lead to an additional energy consumption expenditure at the household level of approximately 17.3% (Japan) – 445% (Mongolia). The number is calculated using the magnitude of the coefficient/energy consumption expenditure. The results also show that homeowners tend to consume more energy than renters in Australia, Brazil, Canada, Chile, China, Colombia, Germany, India, Italy, Japan, Malaysia, Mexico, Russia, the United States, and Vietnam. This indicates that if individuals live in their own houses, the household energy consumption expenditure tends to be higher owing to the wealth effect, as energy is a normal consumption good. Overall, the wealth effect on energy consumption expenditure at the household level is increasing in our sample, and with economic development, energy consumption may increase.
The following factors are confirmed to reduce energy consumption at the household level: (1) energy-curtailment behavior regarding electricity, (2) higher education, and (3) age. The energy-saving effect is confirmed in households. In Canada, the coefficient of energy-saving behaviors is -0.642, indicating that households consume 12.5% less energy when they adopt both energy curtailment behavior and non-saving groups (64.2/513). The Canadian household average energy consumption is 513 USD. Similar results are seen in Colombia, Germany, India, Indonesia, Italy, Japan, the Netherlands, Poland, Russia, Turkey, the United Kingdom, and the United States. The magnitude of the effect of energy curtailment behavior ranged from 6.4% (Russia) to 32% (India) less energy consumption expenditure. Hence, energy-saving behaviors have a favorable effect on environmentally preferable outcomes. By contrast, households in Indonesia save electricity as they tend to spend more on purchasing energy.
Individuals with higher education tend to save energy in 23 out of the 37 nations. For instance, the coefficient for individuals with university-level education is -2.292 and statistically significant at the 1% level. This suggests that households with individuals who have university-level education have less energy consumption expenditure than households with individuals with junior high school or lower levels of education. Similar results are seen in Brazil, Canada, Chile, Colombia, the Czech Republic, France, Germany, Hungary, India, Indonesia, Japan, Malaysia, the Netherlands, the Philippines, Poland, Russia, Singapore, South Africa, Spain, Sweden, Turkey, the United Kingdom, and the United States. Encouraging households to engage in energy curtailment behaviors and higher educational attainment may lead to environment-friendly outcomes.
Surprisingly, purchasing energy-saving household products has a limited effect on reducing energy consumption expenditure at the household level. The coefficients for purchasing energy-saving household products are negative, ranging between -0.044 and -0.763, and are statistically significant in Australia, Canada, the Czech Republic, Italy, and Kazakhstan. Hence, the purchase of these products in these five countries decreases energy expenditure from 2.9% (China) to 14% (Australia). However, the relationship between energy consumption expenditure at the household level and purchasing energy-saving household products is non-significant in the other countries. Moreover, in Poland and Turkey, households that purchase these products consume more energy than those that do not. Therefore, purchasing energy-saving household products has a limited contribution to energy saving at the household level.
The findings also show that older individuals tend to have lower energy consumption. The coefficients for the age variable are negative and statistically significant in 30 countries (out of 37). The effect of age on energy consumption expenditure ranges between -0.003 and -0.148, indicating that as the average age of individuals increases by one year, their monthly energy consumption expenditure reduces from 0.3–14.8 USD. This may be because older individuals are more likely to live frugally.
Source: Ecology - nature.com
