Personal Income Expenditures

[attachment=413]PriceElasticityOfDemand_Electricity.pdf[/attachment] [attachment=414]PriceElasticityOfDemand_Electricity_2.pdf[/attachment] Hi Allison, We apologize it took a while to get back to you. We have attached two studies that have some estimates of the price elasticity of demand for electricity. In the longer report, Table 3.4 will be of most interest for you. You can use these papers as a basis to estimate the reduction in electricity demand. Once you have determined the negative demand value, this value could be run as a negative Industry Change Activity, to represent the loss to the electric company. You can also run a positive Household Spending Pattern Activity (Activity Options>Import> Institutional Spending Pattern). After importing the spending pattern(s) you will want to make a few adjustments to it (them). For example, you would want to edit it to take out expenditures on electricity, and probably rent and mortgage. You might also browse the spending pattern to ensure that it does not include any other common expenditures that would be unlikely to change as a result of the price change. The positive value used for the Household Spending Pattern Activity Level would be the negative value used for the Industry Change Activity less some estimated percentage taken out for savings. Please let us know if you have any additional questions.

Thank you. To confirm, are regional differences in the price elasticity of demand for energy embedded within the state and regional data sets or is this something that needs to be modeled separately?

Hi Allison, There is no measure of elasticity in an Input-Output model, these models are static models. The only incorporation for elasticity in the model is that, since the model looks at Output over the course of a calendar year, all price variances that occurred during a year are inherently captured in the overall Output of the industry. You will want to model elasticities exogenously. Please let us know if you have any additional questions.