The effects of schooling rates and income levels on energy consumption in households: A panel data analysis on OECD countries

Abstract

While energy consumption affects many different areas, it is also affected by many different factors. Therefore, policies aiming to reduce energy consumption gain a multidimensional feature. Income level and education play an important role in the success of these policies. Because as the income and education levels of individuals increase, the success rate of policies aiming to reduce energy consumption is higher. In this way, while energy consumption is reduced or used more efficiently, environmental problems are prevented. In this study, the effects of average schooling rate and income level on energy consumption in residences were investigated. For this purpose, the panel data analysis was used within the scope of the annual data of 19 OECD member countries for the 1990–2019 period. As a result of the analysis, a cointegration relationship was detected between the variables and long-term coefficients and error correction coefficient and short-term coefficients were obtained with the Augmented Mean Group (AMG) estimator. The findings show that the long-term average schooling rate has a negative effect on energy consumption in households, but income level has a positive effect on a panel basis. On the other hand, it was also found that the error correction mechanism works and that the income level has a positive effect on the energy consumption in the households in the short term, but the average schooling rate does not have a significant effect on the energy consumption in the households in the short term.