Multidimensional energy poverty and its effects on household consumption and savings: Evidence from Nepal

Abstract

This study examines the impact of multidimensional energy poverty (MDEP) on household consumption and savings, with a focus on potential differences by the gender of the household head. Using data from the Household Risk and Vulnerability Survey (HRVS) 2016–2018, a three-year panel dataset from Nepal covering 6000 households, we apply pooled OLS, dynamic panel fixed effects (FE), panel instrumental variable (IV), and Lewbel's (Lewbel, 2012) 2SLS methods. Our findings reveal that MDEP significantly reduces both household consumption and savings, with more pronounced effects on savings. The corresponding coefficients range from −0.376 to −0.092 for consumption and from – 0.722 to −3.213 for savings, suggesting that fully transitioning out of MDEP could increase household savings by 72.2 %–321.3 %. The effects of MDEP are consistent across households, regardless of the gender of the household head. This study underscores the importance of addressing MDEP to enhance household welfare and recommends that policymakers focus on expanding reliable and affordable energy access as part of broader economic development strategies to improve overall living standards in developing countries.

Keywords

• Multidimensional energy poverty
• Consumption
• Savings
• Gender