The Demand for Energy-Using Assets among the World's Rising Middle Classes
- (pp. 1366-1401)
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.Citation
Gertler, Paul J., Orie Shelef, Catherine D. Wolfram, and Alan Fuchs. 2016. "The Demand for Energy-Using Assets among the World's Rising Middle Classes." American Economic Review, 106 (6): 1366-1401. DOI: 10.1257/aer.20131455Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- I32 Measurement and Analysis of Poverty
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- O12 Microeconomic Analyses of Economic Development
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q47 Energy Forecasting