Fifth issue of Gentse Economische Inzichten


Today the fifth issue of Gentse Economische Inzichten (Ghent University Economic Insights) is published. Gentse Economische Inzichten is a forum for the broad societal dissemination of research findings and policy recommendations by professors of the Department of Economics of Ghent University. Given that this forum focusses on the Flemish community, the Gentse Economische Inzichten are published in Dutch.

In this issue, based on recent scientific research, we discuss impact of the energy bill on the energy consumption, consumption and saving behavior of Belgian households.

These are the most important insights:

  1. An average family paid €170 a month for energy this summer. That is a lot less than the amounts the government relied on for the compensation measures, which casts doubt on the usefulness of certain measures.
  2. The price elasticity of the demand for energy is greater with price increases than with similar price decreases. This suggests that we will permanently have less energy consumption when prices would normalize again.
  3. The price elasticity decreases significantly with larger price increases. That means that the effectiveness of the price mechanism in influencing consumption is decreasing, while the leverage effect of a supply disruption on energy prices is increasing.
  4. The impact of higher prices on energy consumption is similar for high and low incomes, or for families with many or few savings buffers.
  5. A decrease in disposable income after paying the energy bill is 40% by saving less and 60% by reducing other expenses. Although there are large differences according to the family profile, in especially the financial capacity of the family.
  6. The effectiveness of the VAT reduction and energy vouchers to support household consumption is low. Most of the savings on the energy bill are saved.
  7. In contrast, social tariffs, and their extension, are very effective in supporting the other consumption expenditures of those households.
  8. Contrary to what could be expected based on market models, energy vouchers stimulate energy consumption more than lower prices. This prompts caution when using this instrument.

Read the full fifth issue of Gentse Economische Inzichtenpdf