The paper investigates the determinants of household energy spending and energy
budget shares, with a focus on understanding their non-linear relationship with
income, and the presence of economies of scale. The analysis is based on a unique,
harmonized collection of official household surveys from 13 Latin American countries.
This dataset allows distinguishing between expenditures on electricity, domestic gas,
and fuel for private transportation, providing a comprehensive distributional view of
the energy spending profile of the residential sector. The estimated empirical Engel
curves behave similarly; however, the derived income elasticities show marked
distinctions by fuel, and their actual values depend on the households’ relative position
over the income distribution. For electricity, the elasticity tends to increase in income
but stabilize at the wealthiest segments. For gas and transport fuel, it decreases under
different income paths. In this dataset, the examination returns income elasticities on
the (0,1) interval, suggesting that energy commodities are necessity goods. However,
the distribution of aggregate energy expenditure needs to be considered. Specifically,
there is a great concentration among the richer groups, particularly for transport fuels,
where the top quintile gathers more than half of the aggregate spending. The results
also indicate economies of scale––for electricity and domestic gas––with respect to
family-age composition, and to a lesser extent with respect to dwelling size. In the
case of electricity, these economies are more pronounced for richer households.
These results join the previous literature in emphasizing the relevance of taking into
account household demographic and socioeconomic trends for energy management.