Household energy consumption versus income and relative standard of living: A panel approach

Our fundamental premise is that energy consumption at the household level is a key indicator of standard of living. We employ state-of-the-art panel cointegration techniques to evaluate the nature of the relationship between income measures and energy consumption measures for seven East Indian Ocean countries. The general finding is that income and household electricity consumption are not cointegrated. Given this finding, we conclude that standard of living measures that rely on income measures and do not include household-level energy consumption information will necessarily miss important indications of both levels and changes of standard of living.