Effects of renting on household energy expenditure: Evidence from Australia

This paper uses household survey data from Australia to investigate whether renters face larger energy bills than otherwise similar households. We find that a negative unconditional effect of renting on residential electricity expenditure becomes positive when controlling for log net wealth, with renters on average spending about 8% more than otherwise similar households. This is a larger effect than in most prior studies. The effect operates via higher usage quantities rather than higher average prices, and a similar effect is found for overall residential energy expenditure including natural gas. Central to the story is that renters tend to have lower net wealth, and net wealth is associated with higher energy use due to reasons including additional appliance ownership. This makes net wealth an important control. The findings cast light on the potential for more ambitious policy responses to reduce energy-related disadvantages faced by renters in Australia. There is also scope for further research into whether similarly large effects are evident in other countries.

Automated summary

This study uses household survey data from Australia to examine whether renters face higher energy bills compared to similar households. The findings show that, after controlling for net wealth, renting has a positive effect on residential electricity expenditure, with renters spending on average about 8% more than otherwise similar households. The effect is driven by higher usage quantities rather than higher average prices, and a similar pattern is observed for overall residential energy expenditure. The study highlights the importance of net wealth as a crucial control variable and suggests the potential for more ambitious policies to address energy-related disadvantages faced by renters in Australia. Further research is needed to determine if similar effects are observed in other countries.