Measuring and targeting energy poverty in Europe using a multidimensional approach

Despite the plethora of articles on energy poverty, very few use methods rooted in economic theory to measure the number of households facing this situation (i.e. extension) and its severity (i.e. intensity) of this multidimensional condition across different countries. We use a multidimensional approach and factor analysis to estimate a composite index. We compare both methods and use European data on self-reported energy poverty and expenditure to measure the problem at the extensive and intensive margins. We also use our indicators to assess the efficacy of targeting European energy-poor households. We find that Greece, Lithuania, and Bulgaria have the highest proportion of energy-impoverished households and the highest intensity. Ireland has the highest relative efficiency in targeting households in this condition. We also find that while having a low likelihood of being in energy poverty in some countries, the intensity of this condition can be severe. Unemployment, disabilities and face cuts in social benefits increase the probability of being in energy poverty.