The changing demand for energy in rich and poor countries over 25Â years

Country-specific income and own-price elasticities of demand for private consumption of energy are compared across time and affluence for 43 countries that participated in the 1980, 1996, and 2005 International Comparison Program based on estimates from a ten-good-demand system. Results indicate that income elasticities of demand for energy are significantly larger than unitary in 1980, are approximately unitary in 1996 but become inelastic for all 43 countries in 2005. Own-price elasticities decrease absolutely going from 1980 to 1996 to 2005 ranging from − 0.8 to − 1.0 in 1980, − 0.7 to − 0.8 in 1996, and − 0.6 to − 0.7 in 2005. Elasticity estimates are also calculated for the set of countries in 1996 and 2005 that do not participate in the ICP in 1980.

► A demand system including energy is fit to 1996 and 2005 data of 43 countries. ► Reported income and own-price elasticities of energy are compared to those in 1980. ► Elasticities are also reported for 71 and 101 additional countries in 1996 and 2005. ► Income and own-price elasticities vary inversely with income levels. ► Elasticities decrease absolutely in size when going from 1980 to 1996 to 2005.