ARTICLE IN PRESS

Energy Policy 32 (2004) 1723–1735

An analysis of cross-sectional variations in total household energy

requirements in India using micro survey data
Shonali Pachauri*
.
Centre for Energy Policy and Economics, Swiss Federal Institute of Technology Zurich, .
ETH Zentrum, WEC, CH-8092 Zurich, Switzerland

Abstract

Using micro level household survey data from India, we analyse the variation in the pattern and quantum of household energy
requirements, both direct and indirect, and the factors causing such variation. An econometric analysis using household survey data
from India for the year 1993–1994 reveals that household socio-economic, demographic, geographic, family and dwelling attributes
influence the total household energy requirements. There are also large variations in the pattern of energy requirements across
households belonging to different expenditure classes. Results from the econometric estimation show that total household
expenditure or income level is the most important explanatory variable causing variation in energy requirements across households.
In addition, the size of the household dwelling and the age of the head of the household are related to higher household energy
requirements. In contrast, the number of members in the household and literacy of the head are associated with lower household
energy requirements.
r 2003 Elsevier Ltd. All rights reserved.

Keywords: Consumption patterns; Household energy requirements; Indirect energy

1. Introduction gate level thus also provides information on individual

There are a multiplicity of reasons why the study of
household consumption patterns and energy require-
ments is of immense importance especially for a large
developing country like India. For one, households are a
major consumer of energy and contribute, to a large
extent, to the total energy use of the nation. At present,
the share of direct energy use of households in India is
about 40% of the total direct commercial and non-
commercial indigenous energy use (Pachauri and
Spreng, 2002). If, in addition, one takes into account
the indirect or embodied energy in all goods and services
purchased by households, then about 70% of the total
energy use of the economy can be related to the
household sector, the remaining 30% comprise of the
energy requirements of government consumption, in-
vestments and net imports (Pachauri and Spreng, 2002).
For another, household spending and consumption
patterns furnish by no means a complete, but a detailed
picture of how people live. A study of the direct and
indirect household energy requirements at a disaggre-
*Tel.: +41-1-632-41-51; fax: +41-1-632-10-50.
E-mail address: shonali.pachauri@cepe.mavt.ethz.ch (S. Pachauri).
lifestyles of households, their energy use and overall
level of well being. The use of micro level survey data on
household expenditures, as employed in this study,
allows for an enquiry into the nature of variations in the
patterns and volumes of consumption between different
households with varied lifestyles, as well as the causes of
these variations.
In India, the total (direct and indirect) household
energy requirement was on average approximately
0.4 kW per capita in 1993–1994. This is about one-fifth
of the global average of 2 kW and slightly less than half
the amount postulated by Goldemberg (1990) as
necessary to satisfy basic human needs. Thus, energy
poverty is still a reality for most of the Indian
population. The distribution of the population with
regard to energy consumption also shows that over 60%
have a per capita total household energy requirement of
less than 0.5 kW per year (Pachauri, 2002). In addition,
to the wide disparities in the quantities of energy used,
there are large variations in the types of energy used and
patterns of consumption among households.
A number of economic, technical, socio-demographic
and lifestyle factors have an influence on total energy
requirements of households in India. In this paper, an

0301-4215/04/$ - see front matter r 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/S0301-4215(03)00162-9
 ARTICLE IN PRESS
1724 S. Pachauri / Energy Policy 32 (2004) 1723–1735
analysis of factors influencing household energy require-
ments for a random cross-section of households cover-
ing the entire area of the country is undertaken. We
analyse not only direct but also indirect energy use of
households. Direct energy use of a household refers to
the consumption of all fuels and electricity, whereas the
indirect energy use comprises the energy embodied in all
goods and services consumed, or in other words the
energy required to produce the goods and services that
are bought by households. Within the direct energy
category, we include not only commercial but also non-
commercial energy consumption. Non-commercial en-
ergy forms, largely fuelwood and other biomass, are still
the main source of direct energy use in India for a large
proportion of the population. In fact, more than 80% of
the direct energy consumed in villages even today is
from non-commercial sources. In some instances,
especially in urban areas, a market for fuelwood does
exist and it is bought commercially, however in this
paper fuelwood is always referred to as non-commercial.
The direct and indirect energy requirements for a wide
range of households in India are calculated as a function
of household expenditures. In order to do so, we
combine data from a large national household expen-
diture survey for India, with estimates of energy
intensities for production sectors that were calculated
in an earlier study using national input-output tables
and energy flow statistics (Pachauri and Spreng, 2002).
An empirical multivariate regression function is also
estimated in order to determine the extent to which
different household characteristics, individually and
jointly, are responsible for variation in per capita total
energy requirements in India for the year 1993–1994.
This analysis also provides estimates of the expenditure
elasticity of total per capita energy requirements.
Several studies exist that estimate the direct and
indirect energy requirements of households in developed
countries. These include those for countries like New
Zealand (Peet, 1985); Germany (Weber and Fahl, 1993);
Netherlands (Vringer and Blok, 1995a; Wilting, 1996);
Australia (Lenzen, 1998); and Denmark (Munksgaard
et al., 2000; Wier et al., 2001). Studies for developing
countries, however, are more difficult to find. The only
one carried out for India is one by researchers at the
Indira Gandhi Institute of Developmental Research.
They use input-output analysis and aggregated house-
hold expenditure survey data to calculate the carbon
dioxide emissions from energy consumption for differ-
ent groups of households for the year 1989–1990 (Murty
et al., 1997a, b; Parikh et al., 1997).
Given the wide disparities in lifestyles and energy use
evident in India the use of micro-level data, which
reflects individual and household behaviour, is consid-
ered more suitable to shed light on the nature of
consumer responses and lifestyles. Micro approaches to
energy modelling also enable an analysis across different
heterogeneous household groups and allow for the
incorporation of a wide variety of household character-
istics within the analysis (Hawdon, 1992). Recent studies
that make use of micro data on household consumption
from the National Sample Surveys have focused on
different aspects of household consumption.1 However,
this paper is to our knowledge the first attempt at
estimating and analysing total (direct and indirect)
energy requirements at the individual household level,
in the Indian context, using national level representative
survey data.
The paper is organised as follows. Section 2 starts
with a description of the sources of data used, data
modifications carried out and methods employed.
Section 3 focuses on an exploratory analysis of the
data. The empirical model developed and the estimation
procedures are presented in Section 4. Results from the
model estimation are discussed in Section 5. Section 6
provides in brief some simple simulations of household
energy requirements based on changes in the values of
some key independent variable and the parameter
estimates from the regression model estimated. Finally,
Section 7 concludes.
2. Data sources and methods
2.1. Description of the data
Data on household consumption expenditure from
the National Sample Survey (NSS) Round 50 for 1993–
1994 (NSSO, 1998) were used for the analysis carried
out in this paper. The household expenditure data
formed the basis for calculating primary energy require-
ments for different categories of household spending
along with the estimates of energy intensities of
producing sectors calculated in Pachauri and Spreng
(2002).
The National Sample Survey (NSS) is periodically
conducted to collect household budget data from a large
nation-wide probability sample of households by the
interview method. The survey covers the entire area of
the country, involving separate and comprehensive
coverage of rural and urban areas, with the exception
of some very interior areas, and the disputed regions of
the State of Jammu and Kashmir.
A detailed description of the sampling methodology is
given in the publication ‘‘Sarvekshana’’ (NSSO, 1997).
The sampling design is based on a two-stage stratified
random sampling procedure with the first stage com-
prising of either villages (in rural areas) or blocks (for
urban areas), and with households forming the second
1
For literature on studies adopting a complete demand systems
approach to household consumption estimation in India refer to
Meenakshi and Ray (1999), and Ray (1985).
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S. Pachauri / Energy Policy 32 (2004) 1723–1735
stage units. The households are selected systematically
with equal probability, with a random start. Weights for
each individual household observation are provided
with each estimate on the raw data tape. In order to get
an adequate number of sample households from the
affluent section of the society, the NSS 1993–1994
survey, for the first time, stratified the households into
affluent and others, based on their assets holding and
monthly consumption expenditure. Two households
from the affluent and 8 households from ‘others’ were
selected in a circular systematic way with a random start
(NSSO, 1997).
Household consumption as included in the survey
includes consumption of goods and services acquired
through (a) purchases in the market, (b) receipts in
exchange of goods and services, (c) subsistence produc-
tion, and (d) transfer receipts such as gifts and loans.
The household consumption expenditure schedule used
for the survey collects information on quantity and
value of household consumption with a reference period
of the last 30 days preceding the date of the interview.
For certain items, such as durable goods and clothing
and footwear, data is additionally collected with a
reference period of one year. However, for the purpose
of this paper, only the data pertaining to the 30-day
recall period is made use of.
To minimise recall errors, a very detailed item
classification is adopted to collect information, includ-
ing about 200 items of food and beverages, 20 of fuel
and energy, 25 items of clothing and footwear, 25 items
of educational and medicinal expenses, 70 items of
durable goods, and about 80 other miscellaneous goods
and services items. In addition, data on a host of other
socio-demographic variables and dwelling attributes are
also collected through the survey.
2.2. Data preparation
The data on the raw data tape as provided by the
National Sample Survey Organisation were very dis-
aggregated and followed the detailed item classification
described above. It was therefore, necessary to aggregate
the expenditure data into 55 broad consumption
categories that were conformable to the sector energy
intensities for the year 1993–1994 estimated by Pachauri
and Spreng (2002). Most of the results presented in this
paper are in a further aggregated form for a classifica-
tion based on 12 broad consumption categories (see
Table 9 in the appendix for a description of these).
In addition, other modifications needed to be carried
out on the dataset before a multivariate regression
model could be fitted. In principle, the regression
analysis should be applied to all respondent households.
In practice, however, certain observations had to be
excluded because of the incompleteness of the data and
missing values. Thus, observations for households that
1725
did not report any household expenditure on direct
energy were excluded. It is feasible but quite unlikely
that these households really had no direct energy
requirements. However, since the number of observa-
tions in this category was very small, excluding these
observations did not have any significant impact on the
regression results. Some other observations were also
excluded because of missing information on the other
relevant variables like age, household size, area of
dwelling, etc. In all, the number of observations
excluded was less than 1 percent of the total sample.
Given the large sample size their exclusion was not
considered likely to impact the analysis in any significant
way.
2.3. Methods
The general methodology used for estimating the
energy requirements of households is outlined in
Pachauri and Spreng (2002). Their analysis also
provides estimates of energy intensities for 100 produ-
cing sectors in India calculated by means of the input-
output energy analysis method and by employing data
on input-output transactions and sectoral energy flows
for the year 1993–1994. These estimates of the total
energy intensities of producing sectors are used in
conjunction with the micro survey data on household
expenditures in order to calculate household energy
requirements at a disaggregate level.
The indirect energy requirements of households were
calculated by multiplying the expenditure for each
consumption category with the appropriate energy
intensity value. For the 55 broad consumption cate-
gories included in the household survey data, the match
between consumption categories and the input–output
sector classification was easily handled, as they both
followed a fairly similar scheme of classification. In
order to calculate direct primary energy requirements of
households, physical quantity data on the direct
consumption of fuels from the household survey were
used. The survey included volume data on the con-
sumption of 15 different direct fuel types, of which data
on the consumption of match sticks and candles had to
be discarded, as there appeared to be high errors
associated with the data for these categories. Physical
data for the other 13 fuels were recorded in a number of
different physical units, e.g. kWh for electricity, kg for
firewood, etc. Thus, the first step was to convert the fuel
quantities to uniform physical energy units of MJ. Next,
physical energy intensities for direct fuels from the
input-output tables (that provided the energy require-
ments for the energy sectors) were multiplied with the
household fuel consumption quantities in MJ, to arrive
at the primary energy requirements of direct fuels.
The formal statistical evaluation of factors that affect
the variation in per capita total (direct and indirect)
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1726 S. Pachauri / Energy Policy 32 (2004) 1723–1735
household energy requirements was carried out both
graphically and econometrically. In other words, there
were two sets of analysis performed on the data. The
first involved descriptive methods to characterise general
patterns of per capita total household energy require-
ments. Tables and graphs were developed to describe
trends of household energy requirements across various
related variables. The second analysis was a multivariate
regression. The only previous study that did a similar
regression estimation was an early study by Herendeen
and co-authors that used 1972–1973 survey data for the
USA (Herendeen et al., 1981). In this paper a model was
fit using per capita total household energy requirements
as the dependent variable. The model was primarily
developed to formalise and quantify our knowledge and
understanding of the relationships between household
energy requirements and economic variables like ex-
penditure, household dwelling characteristics like area
and type, household family attributes and demographics
like size, education, age, etc., and other social and
lifestyle type variables, that explain the variation in total
per capita energy requirements in Indian households.
3. Exploratory data analysis
In the following section, per capita total household
energy requirements will be considered in relation to
some important household characteristics and variables.
Variables that have an impact on total household energy
requirements can be grouped in various ways. In what
follows, the main heads under which the variables are
grouped are economic variables, demographic variables,
and household dwelling attributes. The key variables
with respect to which results are presented here for each
of these categories are described in what follows.
I. Economic variables:
Total household expenditure.
II. Demographic variables
Rural/urban location,
Number of household members.
III. Dwelling attributes
Covered area of dwelling,
Construction type,
Dwelling type.
Total monetary expenditure (which is used as a proxy
for income) of households is the most important
economic variable influencing total household energy
requirements. Table 1 shows average per capita energy
requirements for households in different expenditure
classes. It is apparent from the table that households
with higher expenditure clearly have higher energy
requirements. While both direct and indirect energy
requirements are higher for those with higher household
expenditure levels, the difference in indirect energy
requirements between households in different expendi-
ture classes is much greater than the difference in direct
energy requirements. This implies that indirect energy
requirements increase more directly with increase in
household expenditures than direct energy requirements
and the share of indirect to direct also rises significantly
from the lowest to the highest household expenditure
group.
Data on household consumption in the National
Sample Survey are reported separately for rural and
urban2 areas of the country, largely because there are
differences in the lifestyles of households residing in
these broad geographical areas. There are differences in
the energy requirements of rural and urban residents as
well as can be seen in Table 1. On an average, urban
energy requirements per capita are 25% higher than
those of rural residents. This is largely a result of higher
incomes and therefore higher per capita expenditure
levels in urban areas as compared to rural areas. In
addition to the indirect energy requirements of urban
households being higher than that of rural ones, large
differences are apparent in the case of direct energy
needs too. Most rural households still rely almost
entirely on non-commercial energy sources for their
direct energy needs, whereas the share of commercial
sources of energy is much higher in urban households
(see Fig. 1). It is also clear that largely as a result of this
difference in the patterns of use of direct energy types,
rural households are more energy intensive on an
average than urban households. This is a pattern that
has also been observed in studies done for other
countries e.g. Australia (Lenzen, 1998) and Norway
(Herendeen, 1978).
From Fig. 1 other differences in the pattern of energy
requirements for persons belonging to different expen-
diture groups and living in rural and urban areas are
evident. For all three expenditure groups depicted, per
capita energy intensities for food consumption are
higher in rural households as compared to urban
households. Clearly, this implies that within the food
category, rural households spend their money on more
energy intensive items of expenditure than urban
households. In general, however, urban households
have higher food energy requirements than rural
households. Urban households, in all expenditure
classes, also have, on average, higher non-food indirect
energy requirements per capita than their rural counter-
parts. In particular, the share of energy required for
manufactures and transport is seen to increase signifi-
cantly with a rise in levels of total expenditure, especially
2
The official definition of urban areas is based on number of criteria
including ‘‘(a) the population of the place should be greater than 5000;
(b) a density of not less than 400 persons/km2; (c) three-fourths of the
male workers are engaged in non-agricultural pursuits.’’ (GoI, 2001).
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S. Pachauri / Energy Policy 32 (2004) 1723–1735 1727

Table 1
Total per capita household energy requirements for different economic groups

Household expenditure Direct energy in GJ per Indirect energy in GJ Total energy in GJ per
groups capita p.a. per capita p.a. capita p.a.

URBAN Bottom 40% 2.97 3.17 6.14

Middle 50% 4.28 5.95 10.23
Top 10% 7.36 14.53 21.89
Average 4.02 5.58 9.60

RURAL Bottom 40% 2.93 2.55 5.48

Middle 50% 4.06 4.20 8.26
Top 10% 5.56 9.11 14.67
Average 3.73 3.97 7.70

ALL-INDIA Bottom 40% 2.97 2.65 5.63

Middle 50% 4.08 4.59 8.67
Top 10% 6.04 10.94 16.98
Average 3.80 4.37 8.17

Fig. 1. Pattern of per capita household energy requirements.

for urban households. Increased need for mobility and
poor public transport infrastructure in most Indian
cities has meant that with rising incomes, people opt for
personally owned modes of transport. In addition, the
better availability, accessibility and visibility of manu-
factured goods in urban areas has meant that with
increasing urbanisation and income levels, there has
been a greater degree of penetration of these items in
Indian households leading to an increasing share of non-
food indirect energy requirements in better-off house-
holds. The largest variation in the pattern of household
energy requirements across different total expenditure
classes is for the categories of direct energy use. Direct
commercial energy requirements of urban residents is,
on average, between two and three times that of rural
residents for the corresponding total per capita house-
hold expenditure levels. On the other hand, non-
commercial energy needs of rural households are much
higher than that of their urban counterparts. For the top
expenditure class in rural areas this is close to seven
times as high as in urban areas.
Finally, Fig. 2 presents the differences in energy
requirements for various different household sizes. In
general, total per capita energy requirements are lower
for persons living in larger households. However, in the
case of urban households, per capita total household
energy requirements increases from single person house-
holds to those with two residents. Comparing the
expenditure levels for the different household size
categories of households can also help explain these
differences. The increase in energy requirements from
single person households to those with two residents in
urban areas is because most persons classified as single
persons in urban areas belong to the poorest homeless

1728
14000
Energy in MJ per capita per year
12000
10000
8000
6000
4000
2000
0 the energy requirements at an individual household level
1 2 3-5
Household size
Fig. 2. Average per capita household energy requirements by house-
hold size group.
category. In all other cases, however, an increase in the
size of the household reduces per capita direct, indirect
and total household energy requirements.
Table 2 shows the direct and total energy require-
ments for different household dwelling types. The
covered area of household dwelling, the type of dwell-
ing, and the type of construction are some of the
attributes of the household stock whose relationship to
total household energy requirements per capita have
been examined here. It is clear from the table that people
living in pucca houses, i.e., houses built with modern
materials like cement and bricks, have higher total
energy requirements as compared to those who live in
semi-pucca and katcha houses (houses built with
traditional construction materials, like mud, thatch,
etc.). It is also evident that people living in pucca houses
have higher total per capita expenditure levels and
therefore the type of construction is clearly correlated
with the overall income or expenditure levels and
general standard of living of the inhabitants. In addition
to the type of construction, the type of dwelling, i.e.
whether an independent house, flat, chawl3 or other,
also influences the total household energy requirements.
In general, larger families live in independent houses
rather than flats, and people living in flats have higher
expenditures and energy requirements than those in
either houses or chawls. Finally, the size of the dwelling,
in terms of square feet of covered area, appears to be
highly correlated with the total household size, but
people living in larger dwellings have higher total per
capita household energy requirements than those in
smaller dwellings. A higher direct electricity requirement
for households living in larger dwellings is also observed
and this seems reasonable given the fact that larger areas
3
A chawl might be described as a building with a number of
generally single-roomed habitations having a common corridor and
bathing and toilet facilities.
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S. Pachauri / Energy Policy 32 (2004) 1723–1735
require more electrical fittings and fixtures such as fans,
Indirect energy lights, coolers, etc.
Direct energy
4. Model and estimation
In an earlier study by Pachauri and Spreng (2002), the
total primary energy requirements associated with
private household consumption expenditures at a
national level were estimated for India. This paper is
an extension of that work, but in contrast, focuses on
5-7 >7
in order to explore the relationship of consumption
patterns and household characteristics on total house-
hold energy requirements for households with different
lifestyles and living situations.
The per capita total (direct and indirect) energy
requirement of households is viewed as a derived
demand that is determined by primary demand for
other energy using goods and services like appliances
and electrical devices and other consumer goods and
services with their embodied energy content. Following
standard economic theory individuals are assumed to be
utility maximisers, who maximise their utility subject to
their budgetary constraints. The derived demand for
total per capita energy requirements can then be
represented by Eq. (1).
Ei ¼ f ðYi ; Hi ; Fi Li Þ; ð1Þ
where Ei refers to total per capita energy requirements
of the ith individual, Yi refers to total per capita
household expenditure, Hi refers to a vector of various
household dwelling attributes, Fi refers to a vector of the
demographic or family type variables, and Li refers to a
vector of geographic location variables.
The double log functional form was ultimately chosen
for the parametric specification of the regression
equation following the tradition of most energy demand
studies (Herendeen et al., 1981; Garbacz, 1983; Bose and
Shukla, 1999). This form has the added advantage that
coefficients are easily interpretable and represent elasti-
cities of demand. In other words, estimated coefficients
represent the percent change in total per capita energy
requirements as a result of a one percent change in each
of the independent continuous variables. The percentage
effects for the dummy variables can also be easily
derived by exponential transformation of the coeffi-
cients.
The model estimated was therefore of the form
ln Epc ¼ a0 þ b1 DRC þ b2 DRN þ b3 DRW þ b4 DRS
þ b5 I þ b6 U þ b7 NV þ b8 IL þ b9 ln Ypc
X
þ b10 ln AD þ b11 SA þ gi DHSi
i
X
þ lj DAHj ; ð2Þ
j
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S. Pachauri / Energy Policy 32 (2004) 1723–1735 1729

Table 2
Total per capita household energy requirements for different household dwelling characteristics

Average household Average per capita Average per capita Average per capita Percent of the total
size expenditure total energy direct energy population
In numbers In ‘000 Rs. In GJ p.a. In GJ p.a. In %

Construction type
Katcha 5.6 2.9 7.4 3.8 25
Semi-pucca 6.1 3.2 7.5 3.7 34
Pucca 6.1 5.1 9.6 4.1 41

Dwelling type
Independent house 6.2 3.7 8.2 3.9 82
Flat 5.1 6.9 11.7 4.8 5
Chawl 5.4 4.0 8.2 3.7 7
Others 5.0 4.2 7.9 3.3 6

Dwelling size (in sq. ft.)

o200 5.0 3.5 8.0 3.9 27
200–350 5.6 3.6 7.9 3.7 23
350–615 6.2 4.0 8.5 3.9 25
>615 7.2 4.5 8.9 3.9 25

Table 3
Variable definitions

Variable Definition

DRC Dummy variable taking the value of 1 if the person lives in a Central State and 0 otherwise
DRN Dummy variable taking the value of 1 if the person lives in a Northern State and 0 otherwise
DRW Dummy variable taking the value of 1 if the person lives in a Western State and 0 otherwise
DRS Dummy variable taking the value of 1 if the person lives in a Southern State and 0 otherwise
I Dummy variable taking the value of 1 if the person is living in an independent single-unit house and 0 otherwise
U Dummy variable taking the value of 1 if the person lives in an urban area and 0 otherwise
NV Dummy variable taking the value of 1 if the person is non-vegetarian and 0 otherwise
IL Dummy variable taking the value of 1 if the person is illiterate and 0 otherwise
ln Ypc Natural logarithmic transformation of total per capita monthly expenditure in Rupees
ln AD Natural logarithmic transformation of total area of the household in square metres
SA Dummy variable taking the value of 1 if the person is self-employed in agriculture and 0 otherwise
DHSi Dummy variables for household size
DAHj Dummy variables for the age of the head of the household

where, a0 is the constant term, b’s, g’s and l’s are
variable coefficients and a description of each of the
variables is provided in Table 3.
The main economic variable included in the model is
total per capita expenditure. Dummy or discrete
variables are introduced in the model to capture regional
differences in the location of the household. Thus, four
regional dummies were used to capture differences for
the five different regions—North, West, Central and
South. Individuals residing in the states of the North
East4 are taken as the reference households to avoid
singularity due to the use of binary dummy variables in
the model. In addition, a single dummy variable is also
4
Refer to Table 10 at the end of the paper for a description of states
included in each region.
used to capture the differences in per capita energy
requirements across rural and urban households.
Household dwelling characteristics that affect energy
requirements are captured by two variables. Total
covered dwelling area in square metres, and a dummy
variable that captures the difference between single-unit/
independent housing as opposed to either flats or chawl
type dwellings.
Finally, various household family type, lifestyle type
and demographic variables are included in the model.
Dummies for age of the head of the household and total
household size (number of members) are included. For
each of these categorical variables the first category is
omitted (household size one, and age less than 25). Also
included in the model are a dummy variable for
education that takes the value of one if the individual
is illiterate and zero otherwise and a dummy variable for
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1730 S. Pachauri / Energy Policy 32 (2004) 1723–1735

Table 4
Descriptive statistics for variables

Variable Mean Standard deviation Quartile 1. Median Quartile 3.

Epc 679.43 580.86 441.93 593.36 803.05

MJ/per month
HS 5.98 2.55 4.00 6.00 7.00
Numbers
Ypc 321.21 373.85 189.19 258.40 369.61
Rupees/month
AG 44.71 13.68 35.00 43.00 55.00
Years
AD 367.58 230.98 180.00 300.00 500.00
Sq. feet

Table 5
Descriptives for dummy variables

Variable Condition under which the variable value is one Frequency

NV Households whose inhabitants are non-vegetarian 0.58

U Households living in an urban area 0.25
IL Households where the head is illiterate 0.36
DRC Households living in region Centre 0.34
DRN Households living in region North 0.07
DRW Households living in region West 0.19
DRS Households living in region South 0.24
I Households that reside in independent home dwellings 0.82
SA Households where the head is self-employed in agriculture 0.31

employment type that takes the value of one if the
household head is self-employed in agriculture and zero
otherwise. In addition, a variable to capture food habits
is also included by using a dummy variable to
distinguish between non-vegetarians and vegetarians.
The regression analysis was ultimately carried out on
a sample size of 112,202 observations using the ordinary
least squares (OLS) method. A number of regressions
were performed using a number of different combina-
tions of independent variables before the most signifi-
cant ones were selected. The variance inflation factor
(VIF), condition index, tolerance, and the covariance
and correlation matrices were used to assess multi-
collinearity among the independent variables in the
model. In general, multicollinearity is seen to be a
problem in the model if the VIF is greater than 10 for
any of the independent variables. However, in our
model an examination of the VIF’s did not reveal a high
degree of collinearity between any of the independent
variables (VIF was less than 4 for all variables).
Residual analysis and plots were also used to check
model assumptions. The residual/predictor plot for an
initial version of the model with no transformation of
the dependent variable indicated heteroscedasticity in
the model. Multiple transformations were tested to
stabilize the heteroscedastic variances, ranging from
power transforms, Box-Cox, and logarithms. Although
none of these were successful in fully stabilising the
variance, the natural logarithmic transform appeared to
reduce the heteroscedasticity. Since the assumption of
variance homogeneity was still not met, we used a
conservative significance level a ¼ 0:01 for parameter
testing and used White’s robust variance–covariance
matrix to generate the robust standard errors for our t-
statistics. Using robust standard errors did not change
any of the conclusions regarding the significance of any
of the variables from the original OLS regression in our
model. Finally, the Hausman Specification test was
applied to test for the exogeneity of per capita
expenditure variable in the model. All analysis was
performed using SAS version 8.2 (SAS-Institute, 2001).
Tables 4 and 5 below provide the basic descriptive
statistics for all the variables included in the model. The
frequency values for the dummy variables signify the
ratio of the total population falling in that category.
5. Results
5.1. Empirical results from the multivariate regression
The model described by Eq. (2) was estimated using
step-wise ordinary least squares. The effect of adding
different variables to the model estimation in terms of
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S. Pachauri / Energy Policy 32 (2004) 1723–1735 1731

their contribution to the partial R2 is provided in Fig. 3.
In the first step, the dependent variable was regressed on
total per capita expenditure by itself. This variable alone
explains 61.4% of the total variation in per capita
energy requirements and dominates the other explana-
tory variables. Adding dummy variables, which describe
the geographical attributes of the respondents, dwelling
attributes and demographic characteristics of the house-
holds increases the explanatory power of the model to
66.4%.
Estimation results for the parameter estimates are
presented in Table 6, which shows that all the variables
included in the model are significant at the 99 per cent
confidence level. This suggests that in addition to the
obvious economic variable, geographic, demographic
and household dwelling and family attributes also play
an important role in influencing total per capita energy
requirements. All four coefficients for the regional
dummy variables are negative, implying that relative
to those residing in the North East, people living in the
North, West, South and Central States all have margin-
ally lower total per capita energy requirements, other
factors remaining constant. For example, one can
surmise from the model results that those residing in
Central States have a per capita energy requirement,
which is about 15% less than those residing in the North
East. On the other hand, those residing in the South
have a per capita energy requirement only 1.8% less
than those living in the North East. The coefficient for
the dummy variable capturing urban–rural differences is
negative implying that keeping all other factors equal,
urban residents have a per capita energy requirement
that is about 10% lower than those living in rural areas.
This can possibly be attributed to the fact that the
proportion of non-commercial energy used is higher in
rural areas, resulting in higher total direct primary
energy requirements for rural residents.
The sign of the coefficient for the household dwelling
area is positive indicating that persons living in larger
houses have marginally higher per capita energy
requirements. The value of the coefficient for the
dummy variable for type of household dwelling (sin-
gle-unit versus flats/chawls) is also positive implying that
compared to those who live in flats or chawls, those in
single family houses or independent housing units have
about 6% higher per capita energy requirements.
Demographic and family attribute variables also have
a significant influence in explaining the variation in total
per capita energy requirements in the model estimated.
The coefficients for the dummies for household size are
all negative, except for the dummy for those households
with two members. This implies that, in general, an
increase in household size by one additional member is
accompanied by a significant reduction in per capita
household energy requirement relative to single member
households, except in the case when household size
increases from one member to two. In fact, the
household size effect is nearly monotone, i.e. coefficients
are greater for larger household sizes. Therefore, if a
household consists of three members, the regression
results indicate that its members would have a per capita
household energy requirement that is about 4% less
than that of a single member household, whereas for a 8
member household, per capita energy requirements are
approximately 21% less than that of a single member
household. The general result that an increase in
household size reduces per capita energy requirement
has been observed in other studies in the Netherlands
(Vringer and Blok, 1995b), USA (Herendeen et al.,
1981), Australia (Lenzen, 1998), and Denmark (Wier
et al., 2001). The coefficients for the age of the head of
the household dummies are all significant and positive
implying that households at a later stage of the family
lifecycle tend to have higher per capita energy require-
ment. Thus, for instance the results indicate that for
households where the head of the household is in the 25–
29 age category, the members have a per capita energy
requirement that is about 7% more than that of

0.62
0.014
0.012
Partial R square

0.01
0.008
0.006
0.004
0.002
0
c
U
D C
D 2
D W
D S9
D S3
S5
D I
D S4
D S6
S7
V
D D
S8
D SA
D 10
D H2
D H3
11
D IL
D H2
D 4
D H9
D H5
D 3
N
D S
D H8
D H7
6
Yp

AH

AH

AH
N

R
R

R
R

AH

AH
H

H
H
H

H
H
H

A
A

A
A

A
A
ln

D
D

Variables
Fig. 3. Partial R square for key predictors of the regression model.
 ARTICLE IN PRESS
1732 S. Pachauri / Energy Policy 32 (2004) 1723–1735

Table 6
Parameter estimates for the model

ln Epc Coefficient Robust std error Robust t value Pr > jtj Exponential values for dummies

Intercept 3.454 0.02050 168.49 o0.0001

ln Ypc 0.666 0.00237 280.45 o0.0001
ln AD 0.026 0.00128 20.31 o0.0001
DHS2 hhsize ¼ 2 0.031 0.00595 5.18 o0.0001 1.031
DHS3 hhsize ¼ 3 0.043 0.00572 7.53 o0.0001 0.958
DHS4 hhsize ¼ 4 0.096 0.00565 17.00 o0.0001 0.909
DHS5 hhsize ¼ 5 0.144 0.00580 24.89 o0.0001 0.866
DHS6 hhsize ¼ 6 0.182 0.00606 30.10 o0.0001 0.834
DHS7 hhsize ¼ 7 0.213 0.00645 33.02 o0.0001 0.808
DHS8 hhsize ¼ 8 0.237 0.00694 34.13 o0.0001 0.789
DHS9 hhsize > 8 0.291 0.00680 42.75 o0.0001 0.748
DAH2 age—[25–29] 0.066 0.00607 10.91 o0.0001 1.068
DAH3 age—[30–34] 0.076 0.00586 12.92 o0.0001 1.080
DAH4 age—[35–39] 0.086 0.00578 14.95 o0.0001 1.090
DAH5 age—[40–44] 0.110 0.00584 18.88 o0.0001 1.116
DAH6 age—[45–49] 0.122 0.00585 20.84 o0.0001 1.130
DAH7 age—[50-54] 0.125 0.00602 20.80 o0.0001 1.133
DAH8 age—[55–59] 0.129 0.00620 20.83 o0.0001 1.138
DAH9 age—[60–64] 0.124 0.00639 19.46 o0.0001 1.132
DAH10 age—[65–69] 0.116 0.00701 16.57 o0.0001 1.123
DAH11 age >¼ 70 0.115 0.00689 16.68 o0.0001 1.122
NV 0.029 0.00223 12.87 o0.0001 1.029
U 0.109 0.00240 45.22 o0.0001 0.897
I 0.055 0.00249 22.22 o0.0001 1.057
DRC 0.167 0.00332 50.29 o0.0001 0.846
DRW 0.095 0.00324 29.29 o0.0001 0.909
DRS 0.018 0.00284 6.39 o0.0001 0.982
DRN 0.029 0.00452 6.37 o0.0001 0.971
IL 0.019 0.00198 9.36 o0.0001 1.019
SA 0.031 0.00282 11.10 o0.0001 1.032

households where the head is less than 25 years old.
Similarly, members of households where the head is in
the 50–54 age category have a 13% higher per capita
energy requirement relative to those households where
the head is less than 25 years of age. The coefficient on
the literacy dummy variable (illiterate versus literate)
indicates that on average illiterates have about 2%
higher per capita energy requirements than literate
persons, all other factors remaining constant. In other
words, illiteracy contributes to higher per capita energy
requirements. The coefficient on the dummy variable for
those self-employed in agriculture is also positive
implying that these households have a slightly (about
3%) higher total household energy requirements per
capita compared to those in other types of employment.
The variable representing food preferences (non-
vegetarian versus vegetarian) is also significant and
positive, which implies that vegetarians have (approx.
3%) lower per capita energy requirements than non-
vegetarians. This result seems intuitive given the high
energy intensity of meat production and is similar to
that reported from most other studies on food energy
requirements (Carlsson-Kanyama, 1999; Kramer et al.,
1999).
The largest coefficient in the model is for the
economic variable—per capita expenditure. The expen-
diture elasticity estimate calculated is in the range of
previous household studies as reported in Table 7. The
expenditure elasticity is 0.67, implying that a one percent
increase in per capita expenditure results in a 0.67%
higher per capita energy requirement.
5.2. Comparison with elasticity estimates from previous
studies
While all the studies reported in Table 7 relate to
developed countries and studies undertaken include only
commercial energy sources, it is surprising to observe
that expenditure elasticities reported are of a similar
order of magnitude to those for India. The lowest
expenditure elasticity is reported for the USA in 1973 at
0.72, whereas the highest is for Denmark at 0.90. The
results for India, therefore, lie at the lower end of the
scale. This is possibly due to the fact that expenditure
elasticity calculated in this study is with respect to total
energy i.e. commercial and non-commercial, whereas
those estimated in developed countries do not take
into account non-commercial energy. Expenditures on
 ARTICLE IN PRESS
S. Pachauri / Energy Policy 32 (2004) 1723–1735
Table 7
Comparison of expenditure elasticity estimates across studies
Study Reference
USA (1960–1961) Herendeen and Tanaka (1976)
USA (1972–1973) Herendeen et al. (1981)
Norway (1973) Herendeen (1978)
NL (1990) Vringer and Blok (1995)
AUS (1993–1994) Lenzen (1998)
Denmark (1995) Wier et al. (2001)
India (1993–1994) Present study
non-commercial energy are often made in kind so they
are very low or even zero. Thus, it could be expected
that non-commercial energy use is less dependent on
expenditure than commercial energy use. Non-commer-
cial energy is also used much less efficiently than
commercial energy and thus provides less service per
unit of physical energy consumed.
6. Simulations for per capita household energy
requirements
The model described above provides us with estimates
for the coefficients of several variables that cause
variation in the per capita total energy requirements
for households in India. A first simple approximation of
the possible magnitude of changes in per capita energy
requirements resulting from changes in the values of
some of the key independent variables from the model is
presented here. In Table 8, the results of this simple
exercise undertaken to calculate the impact on per capita
total household energy requirements of alternative
changes in the values of some of the important variables
included in the regression model, are presented. The
simulations use the elasticities and coefficient values
calculated from the model. The calculated changes in
per capita energy requirements due to possible changes
in the values of some key variables are indicative of the
relative importance of these variables. These are not
meant to be definitive forecasts of future values.
Even these simple approximations show that different
magnitudes of change in the values of independent
variables like per capita household expenditure and
household size can have a significant impact on the
average per capita energy requirements. The actual
magnitude of the impact varies in accordance to
differing assumptions made regarding the level of
change in the different influencing variables. An
indication of the possible magnitude of change can be
inferred from the estimates shown in the table. These
numbers suggest that future policies and developments
that influence change in per capita expenditure, house-
hold size, urbanisation rate, etc. will have an important
1733
Expenditure elasticity of energy
0.87
0.81
0.72
0.83
0.74
0.90
0.67
impact on the rate of growth on per capita total energy
requirements for households in India.
7. Discussion and conclusions
The paper provides results that show that the pattern
and quantum of total household energy requirements
differ significantly across different households. Results
from the estimation of a double logarithmic linear
model indicate that differences relating to economic,
geographic and household dwelling and family char-
acteristics, explain a significant part of the variation in
per capita total household energy requirements. The
results of the estimation show that all the independent
variables, both individually and together, are significant
at the 99 percent confidence level in explaining the
variation in the dependent variable.
Total household expenditure per capita has the largest
positive affect on per capita total energy requirements
according to the model estimated. In other words, this
economic variable dominates variation in per capita
energy requirements for households in India. The
estimated expenditure elasticity for India is in the same
range as those reported in similar studies for developed
countries. Other independent variables included in the
model had a smaller yet measurable effect on the
variation in the dependent variable. Geographic vari-
ables relating to the location of the household were seen
to have an important bearing on variation in per capita
energy requirements, and on average, other factors
remaining unchanged, per capita energy requirements of
rural households were found to be marginally higher
than that of urban households.
In addition, variables relating to household dwelling
attributes, family characteristics, and demographics
were also found to have a measurable effect in
explaining the variation in per capita total energy
requirements. For instance, the coefficients for the
dummies for household size estimated from the model,
suggest that in general an increase in household size is
associated with lower per capita energy requirements,
and that a change to a larger household size as
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1734 S. Pachauri / Energy Policy 32 (2004) 1723–1735

Table 8
The impact of alternative demographic and economic changes on per capita total household energy requirements

Independent variable Percentage yearly change Total percentage impact on dependent

variable over a period of 15 years (%)

Total household expenditure

High growth +5.0% p.a. +78.1
Low growth +4.0% p.a. +57.35

Total area of dwelling

High growth +3.0% p.a. +1.12
Low growth +1.0% p.a. +0.3

Household size
Low growth Decrease from 6 to 5 +0.43
Rapid decrease Decrease from 6 to 4 +1.0
Increase Increase from 6 to 7 0.35

Urbanization
Very rapid +3.0% p.a. 0.2
Low growth +1.6% p.a. 0.1

Literacy
Very rapid 5.0% p.a. 0.06
Low growth 1.0% p.a. 0.02
Non-vegetarianism
Increase +3.0% p.a. +0.1
Decrease 3.0% p.a. 0.08

Table 9
Items comprising the different consumption categories

S. No. Aggregated category Items included

1 Food, Beverages and Tobacco Cereals, Gram, Cereal substitutes, Pulses and pulse products,
Milk and milk products, Edible oils, Meat, eggs and fish,
Vegetables, Fresh fruits, Dry fruits, Sugar, Salt, Spices, Beverages,
Processed foods, Pan, Tobacco, Intoxicants
2 Clothing and Footwear Clothing, footwear
3 Education and Recreation Amusement, Educational expenses
4 Medical care and Hygiene Personal care items, Toilet articles, Medical expenses–medicines,
Medical expenses –services
5 Transport Conveyance (excl. Fuels), Personal transport equipment
6 Other Services Sundry articles, Consumer services, Consumer taxes and cesses
7 Housing and Household effects Rent, Furniture and fixtures, Goods for recreation, Jewellery and
ornaments, Household utensils, Cooking and household
Appliances, Therapeutic appliances, Other personal goods,
Residential bldg, land and other durables
8 Non-commercial energy Firewood and chips, Dung cake, Charcoal
9 Electricity Electricity
10 Coal Coke, Coal
11 Petroleum Products Kerosene, LPG, Other oil, Methylated spirit, Other fuel and light,
Diesel, Petrol
12 Gas Coal gas, Gas

compared to a smaller one results in a greater decrease
in per capita energy requirements, all other factors
remaining the same. In contrast, the age of the house-
hold head is related to higher per capita total household
energy requirements so that families in a later stage of
the family life cycle have higher energy requirements as
compared to younger families.
Parameter estimates from the regression model were
used to carry out a set of simple simulations regarding
changes in per capita energy requirements resulting from
assuming different values of the independent variables.
While these calculations are not meant to provide
definitive forecasts of future values, they are indicative
of the order of magnitude of possible changes in per
capita energy requirements given changes in the values
of some important independent variables. While an
increase in energy consumption is inevitable in the next
years, the level of increase will in a large part be
 ARTICLE IN PRESS
S. Pachauri / Energy Policy 32 (2004) 1723–1735
Table 10
State codes and regions
Region States included
North East Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Sikkim, Tripura, West Bengal
South Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Andaman and Nicobar Islands, Lakshwadeep, Pondicherrry
West Goa, Gujarat, Maharashtra, Rajasthan, Dadra and Nagar Haveli, Daman and Diu
North Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Chandigarh, Delhi
Central Bihar, Madhya Pradesh, Uttar Pradesh
determined by the combined effect of changes in some of
the important explanatory variables that have been
identified in this paper.
Acknowledgements
The author would like to gratefully acknowledge the
National Sample Survey Organisation, Department of
Statistics of the Government of India, for making
available to us the unit level, household survey data. I
would also like to thank Prof. Daniel Spreng at the
Centre for Energy Policy and Economics for his support
and for his review of, and valuable comments on
previous drafts of this paper. All errors and omissions
remain with the author.
Appendix A
Items comprising the different consumption cate-
gories and state codes and regions are given in
Tables 9 and 10.
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