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Cost-of-living shocks can have large and unequal effects, but causal evidence on households’
adaptive responses is scarce. Using Finnish administrative microdata from the 2022 energy
crisis, we exploit variation in electricity contract expirations to identify behavioral responses
in electricity use, labor earnings, financial distress, and residual consumption and savings.
We find notable heterogeneity in responses that shape the final incidence: high-income households
primarily reduced electricity consumption, while low-income households reduced consumption
less, responding instead through increased labor supply, more payment defaults,
and cutbacks in spending and savings. Longer anticipation softens but does not eliminate
these impacts.
