American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
The Electric Gini: Income Redistribution through Energy Prices
American Economic Journal: Economic Policy
(pp. 341–65)
Abstract
In theory, regulators concerned about inequality will deviate from efficient two-part tariffs, charging lower-than-efficient fixed monthly fees and higher-than-efficient per-kilowatt-hour prices. To quantify that relationship, we develop a measure of the redistributive extent of utility tariffs: the "electric Gini." Utilities with higher electric Ginis shift more costs from households using relatively little electricity to households using more. In practice, US utilities whose ratepayers have more unequal incomes have higher electric Ginis. But electricity demand is only loosely correlated with income, which means that electricity prices are an indirect and ineffective policy for countering income inequality.Citation
Levinson, Arik, and Emilson Silva. 2022. "The Electric Gini: Income Redistribution through Energy Prices." American Economic Journal: Economic Policy 14 (2): 341–65. DOI: 10.1257/pol.20200543Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L94 Electric Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy