Elsevier

Energy Economics

Volume 97, May 2021, 105218
Energy Economics

Australia's gambling epidemic and energy poverty

https://doi.org/10.1016/j.eneco.2021.105218Get rights and content

Highlights

  • This paper finds that gambling is a driver of energy poverty.

  • Problem gambling measured by the Problem Gambling Severity Index (PGSI) is positively related subjective energy poverty.

  • Problem gambling measured by the Problem Gambling Severity Index (PGSI) is not related to objective energy poverty.

  • The tipping point where energy poverty occurs is when gamblers are categorised as being at risk of problem gambling.

  • Our analysis shows the effect of gambling on subjective energy poverty is half the size of the income effect.

Abstract

Energy poverty is a growing concern across many countries due to rising energy costs. Energy affordability is essential for households to be able to pay their bills and adequately heat their homes. Here we consider the relationship between energy poverty and gambling. Problem gambling is an increasing societal issue in many countries. Gambling is addictive for many players and at its extreme excessive gambling consumption can lead to multiple economic and social harms. One domain of huge importance is the financial hardship that gambling can create. We utilise the Household, Income and Laboure Dynamics in Australia (HILDA) data to investigate if problem gambling is a driver of energy poverty. We employ a range of energy poverty measures and gambling behaviour proxies. Our findings show subjective measures of energy poverty are positively associated with gambling expenditure. This finding captures the negative impacts of excessive gambling on an individual's ability to pay their energy bills and heat their homes.

Section snippets

Introduction and background

Rising energy prices have led to an increase in the cost of household energy bills and this has resulted in a higher proportion of household income being spent on energy. In a report by KPMG1 it is noted that in the 6 years from 2010 to 2016 there was a 26% increase in energy expenditure by Australian households rising from AU$32.52 to AU$40.92. Further, the proportion of income spent on energy by

Literature

There is no literature that directly addresses energy poverty and gambling behaviours. Given that we have already briefly introduced the literature on the determinants of energy poverty here we will discuss two strands of related literature that are important in the context of our study i) energy poverty and financial hardship and ii) gambling and financial hardship.

Data, variables, and empirical framework

This study employs the Household, Income and Labour Dynamics in Australia (HILDA) data. HILDA is a large nationally representative longitudinal dataset that has been collected over 20 years, since 2001 (see Wilkins, 2017 for further details). However, it is only recently that HILDA has started to include data on gambling behaviours which can be found in waves 15 (2015) and wave 18 (2018) only. This gives us a short two wave longitudinal dataset, where the waves are separated by 3 years. While

Results

We will begin by presenting the results for the relationship between the continuous PGSI and our two measures of objective energy poverty (EP1 and EP2). We present these results estimated via pooled ordinary least squares (POLS), fixed effects (FE) and random effects (RE).

Interestingly we find no significant impact of gambling behaviour as measured by scores on the PGSI on the objective measures of energy poverty (Table 4). However, when we look at subjective measures, we find a highly

Discussion and conclusions

This paper considers the relationship between energy poverty and gambling behaviours. We know of no other investigation of this relationship and yet both energy poverty and problem gambling are on the rise in many countries and are naturally linked through financial hardship. We examine the relationship across the multiple measures of energy poverty utilising the PGSI as our measure of problem gambling.

The results suggest that objective measures of energy poverty can mask the impact of gambling

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