SOME NEXT STEPS

This study is a beginning—and just a beginning—in a large, complex field. Much is left to be done. Among the most important studies that should be undertaken soon is one that would show the impact of price changes for electricity and natural gas on different economic groups—that is, a rigorous, statistical analysis of the price elasticity of demand for households of different kinds.

Prices are rising rapidly now and apparently these increases will continue. Evaluating the effect of price change on demand could point to changes in the utility price structure for promoting customer equity, environmental protection, and energy conservation, while maintaining reasonable profits for public utility services. It could detect the households that contribute to demand peaks for electricity, and discover ways of discouraging their consumption at such times. Peak loads lead to brownouts and ultimately to construction of new generating facilities that use huge amounts of energy themselves, as well as contributing to pollution and other environmental problems.

Additional studies should go beyond our emphasis of associating energy use with income alone. We would have liked to have analyzed the effect on energy use of some key household characteristics, independent of income. Preliminary correlations indicate strong association with the number of persons in the household; this in turn is associated with the stage of the life cycle. When family earning power is at its peak, children are usually still at home; household size is greatest then, and so is energy consumption. We do not know how much influence to ascribe to number of people in the household alone or to stage of the life cycle, given the same house, climate, and kind of urban or rural location.

While income remains basic, other household characteristics could play an independent role; for instance, the presence of more than one earner, a working wife, and residence in a very large metropolitan area compared with a small town. The question is how influential any one of the characteristics may be, apart from income.

Chapter Five, "The Energy Gap," discusses the shortcomings of income compared with wealth or economic security in assessing household consumption. Among influences on potential consumption, aside from current income, are ownership of property other than one's home, income from sources other than a job, education, and workers' benefits (such as private pension and medical and life insurance). All these could affect substantially the degree to which households feel free to spend their income and the kinds of things they spend it on, at varying stages of their life cycle.

The idea of the influence on consumption of a household's