Energy Policy Series Analyze the Energy Demands of Filipino Families

The Ateneo School of Government, through the Access to Sustainable Energy Programme-Clean Energy Living Laboratories (ASEP-CELLs), and with the funding support from the European Union, held the fourth installment of the Energy Policy Series (EPS) last 28 May 2021.

The working paper titled, “Rational Choices and Welfare Changes in Philippine Family Energy Demand: Evidence from Family Income and Expenditure Surveys”, was presented by ASEP-CELLs senior research fellows, Professor Jesus Dumagan, Ph.D., and Dr. Michael RM Abrigo.
 
The paper examined the rationality of energy expenditures of Filipino families in line with economic theory. In particular, it analyzed the Philippine family demands for (1) electricity, (2) gas and liquid fuels, (3) solid fuels, (4) food, and (5) other goods using family income and expenditure surveys in 2009, 2012, and 2015 and found them all rational. With the rationality of expenditures established, corresponding welfare effects to Filipino families were also computed given price increases for energy goods.

Professor Dumagan and Dr. Michael RM Abrigo were joined by Associate Professor Geoffrey Ducanes, Ph.D. and Associate Professor Majah Ravago, Ph.D., from the Department of Economics of the Ateneo De Manila University as reactor and moderator, respectively. As the reactor, Associate Professor Ducanes observed that the paper could explore alternative measures of income or expenditures (i.e. total disbursements or total income instead of current expenditures as used in the paper) to test the robustness of results.

In response, Professor Dumagan and Dr. Abrigo argued that current family spending is more apt as a proxy for the specific demand system they are estimating, which assumes that “nothing is wasted” consistent with economic theory and the relevant literature.

During the open forum, Associate Professor Ravago solicited questions and comments from the audience that revolved around behavioral responses of families to energy price increases, possible extensions of the working paper, among other topics. Professor Ravago also suggested demand and welfare change analysis by income decile, as effects may vary by income level, for more useful policy recommendations.

With a sustained engagement of 100 participants, the webinar shared insights about the impact of price increases in energy goods (e.g. electricity, gas, fuels) to the welfare of Filipino households, and explored ways to reduce the impact of price increases on energy goods, such as through energy-saving habits and investing in power-efficient appliances.

The Energy Policy Series (EPS) is a public virtual forum that enjoins key stakeholders from the domestic and international energy sector to dissect relevant critical issues that center on energy access, renewable energy, and energy efficiency. It features relevant research from the ASEP-CELLs that contributes to pragmatic and impactful energy policymaking in the Philippines and beyond.

The working paper of Professor Dumagan and Dr. Abrigo may be accessed through this link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3837066. Meanwhile, the presentation materials may be found here: http://bit.ly/EPS4_files. A recording of the webinar is also available through the ASOG Facebook page.