Escalating energy and food prices has put affordability and the potential trade-off of necessities in the spotlight. Although previous works have considered the compromise between food, heating and cooling, few have detailed disaggregated impacts on lower-income households. Now, Jane M. Fry and colleagues at Curtin University, RMIT University and University of Melbourne present insights on the trade-off between energy use and food amongst those living in poverty and on low incomes in Australia.
The researchers use data from the representative Household, Income and Labour Dynamics in Australia (HILDA) survey to conduct a multivariable analysis of an energy vs food trade-off amongst low-income individuals, with a focus on which of the two necessities takes preference and under what conditions. The team found that, amongst low-income households, each percentage increase in the relative price of electricity increases energy expenditure by 0.44% and reduces food expenditure by 0.09%. However, for those living in poverty, a relative increase in the price of electricity by 1% equates to an additional 0.37% in spending on energy, but no further significant spending on food. This outcome suggests those living in poverty are unable to reduce their expenditure any further. The disaggregated approach taken in this paper and its associated outcomes may aid policymakers in deciding how best to tackle impacts of rising prices at the household level, in Australia and beyond. For instance, introducing targeted energy efficiency upgrades or redirecting taxes and fees on non-renewable energy sources for those living in poverty might help low-income households to afford to spend more on food.
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