Heat or eat?
Mar 19, 2014
Bishop Hill in Energy: costs

Ross McKitrick emails to point me to an interesting new paper in the Journal of the Royal Statistical Society A about how UK households alter their spending in response to cold weather.

Do households cut back on food spending to finance the additional cost of keeping warm during spells of unseasonably cold weather? For households which cannot smooth consumption over time, we describe how cold weather shocks are equivalent to income shocks. We merge detailed household level expenditure data from older households with historical regional weather information. We find evidence that the poorest of older households cannot smooth fuel spending over the worst temperature shocks. Statistically significant reductions in food spending occur in response to winter temperatures 2 or more standard deviations colder than expected, which occur about 1 winter month in 40; reductions in food expenditure are considerably larger in poorer households.

The full text is available here. There are a number of caveats to the findings that are worth taking on board.

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