Energy Economies 102 (2021) 105464 Contents its avalable at ScienceDinest co Energy Economics journal homepage: ww.clsovier comilocateloneeco ti Fuel poverty and financial distress Andrew Burlinson ’, Monica Giulietti, Cherry Law‘, Hui-Hsuan Liu {Newhart of Es Ai, NR 7, 2 Shit of Bsns an saan agorengh Une, LEE $7 U “pom of Pa Heath remem on Sac, endo Sch of yee and Trp Mii, WCIE 7, * Dg of Compare Bal Same Rael Vor Cli, NWI OTE, UK eywarts ‘Govemments and advacecy groups have drawn attention tothe peearios postion of tase member of sckry Fel prey who are unable to ataln an sdequare level of energy sevles, Lethe fe poor. Concerns have sls tise about {he ability of el poor individuals ro adapt tothe hardship recently brought about by the COVID-19 pandemic. This paper consibutes wo the Iteratue by expiring enpliealy the link bexween fel poverty end fianeal ists prior to and during the fist wave the COVID-19 pandemie- The analysis Is based on the most rent Jongldial, atonal cepresetative survey of the United Kingdom, Understanding Sole (URE, Wave 1, January 2018-Februaty 2020), After eorecting forthe effets of potential endogeneity in de ysiabes of in terest, ur results identify a seatistically robot relationship between fel poverty indleaters and slfzeprted measures of eurent financial eistess, with suonger effects for subjective indicators. The fuel poverty in dcatrs however exert only United influence onan lavas expectation of thei cre Hanlin, ‘Our analysis ofthe fst wave ofthe COVID-19 pandemic also oars that fel poverty contributed to Financial distess. Our main findings aze robust toa site of spetcaion and sesivty checks, Our ress lead to commend assessing measures Which target fuel poverty on the basis oftheir poteaialinieet effect on financial szes 1. Introduction France and close t9 10% of households in Japan (Leyendre and les, 2014; Okushima, 2017; Zhang etal, 2019; Awaworyi Churchill eta Fuel poverty is considered distinct form of poverty, not least because tacking It has the potential to gamer a “win-win-win" for improvements in economic hardship, mental and energy/earbon savings (Boardnan, 199%; Green ‘an Giller, 20085 Hills, 2011). Broadly, over the Last three decades, fuel poverty has been defined as the household’ inability to achieve thermal comfort to levels commensurate with a healthy standard of living ata reasonable cost Boarsman, 1991; His, 2012).' The inc ‘dence of fuel poverty depends on three central drivers income, energy cffcieney and energy prices (Moore, 2012; Thomson et al, 2017). Recent estimates show fuel poverty affects over 2096 of the United states (US) and China, 10% of households in Austral * Gonespon ng autho. 2020; Wiang esl, 2021). The prevalence of fuel poverty in Great Briain (GB) -the focus of the present paper —vares by nation with 10% of houssholds identified as fuel poor in England, 256 in Seottand and 12% in Wales (SES, 20212 Hinson and Bolton, 2020), A near consents has formed around the body of evidence documenting the deleterious fmpact that fuel poverty exerts on the health of households, including higher rates of mortality and higher risk of eardiovascular, inflammatory and mental health conditions (se e.g Crossley and Zi, 2018; Marmot Review Team, 20115 Public Health England, 2014; Thomson et al. 2001). Whilst financial distress is « potential mediator between fuel poverty and health outcomes ils, 2011; Marmot Review Team, 2011), the fuel poverty and financial distess nexus i hitherto undevexploted, Ema eres listen ae (A Bunsen, m gilietealboro ak (M, Gallet, chen aw2Ishin sek C Law verve. HA, eh "the term uel poverty is tise rater than energy” poverty, vet the regional contest ofthe data 2 Is important co note that cis comny tates of fil poverty are not dicey comparable di to difereces in methodology. Innp//doorg/10.1016,}eneco. 2021105464 Received 27 January 202; Received in revised frm 5 July 2021; Aecepted 18 Jy 2021 Available online 22 July 2021, (0140.9883/6 2021 Heir B.V All sights reserved‘especially inthe economies ter A better understanding of fel poverty induced financial alse is paramount In order to evaluate the fll impact of policy interventions affecting energy consuinption and expenditure. With rising energy pr es and stagnant real income in GB (BEIS, 20202), low-income house holds face difficult tradeoffs between energy and otler necessities, 0 and. Corr{INTERNALTEMP, FUELPOV) <0. 2 third source of endogeneity could be attributed to measurement error. For instance, there may be @ non-zero correlation between the errors made by households when self reporting information underpi ring fuel poverty indicators and financial distress measures. Unlike the omission of intemal temperatures, one would expect the bias arising fom self reporting measurement error to be away feom zero! There fore, in order 10 alleviste concerns surrounding endogeneity, we employ suite of instrumental variable (IV) estimators. ‘We ad co the literature by implementing IVs based on the compo nents of GB's nonlinear energy retail pricing system. Ihas been argued previously thar exogenous movements in energy pres aren plausible strane, similar fo the wse of other eommedity prices (eg. food) in the fuel poverty health literature (nou, 2070). Indeed, energy prices hhave the potential to satisty the exclusion restrictions condition. Not least beomse prices are assumed to work directly through fuel poverty, specifically theexpenditire share of income, thereby indirectly aectin ‘tomes of interest, in our ense, financial distress (Aossvoryi Cre et al., 2020; Kaboul, 2020; Awaworyi Churchill and Smyth, 20215 -Munyanyi et a., 2021). Moreover, energy prices heve further potential ‘o satisfy the relevance condition, since one would expect energy prices to be positively and strongly associated with uel poverty However, the preceding lteraute acknowledges concerns about whether prices are exogenous 10 the error term from a statistical perspective (see eg Awaviony Churchill etal, 20205 Kaloull, 2020) and about the potential weak correlation becween the IVS (le, energy prices) and the endoge nous variable Ge. fuel poverty) (Miusyany! et al, 2021). Considering such concerts, dhe present paper exaploys & novel yet complementary array of 1s, including: the marginal price Bf per unt of gas and eee twieity (kWh); the fixed charge for supplying gas and/or electricity to the meter (year). Fixed charges are independent of consumption and typieally cover the costs of the meter (eg. maintaining connection to supply, meter reading and other customer account services); and, the fixed to marginal (FM) ratio. Davies etal. in 2014 introduce the FM ratio as a suficent statistic that describes the time/regional evolution And asymmetry of two-part tvs for representative consumers.” The regional variation in GB's etal energy pring reflects the cost Aiferences oF incumbent companies (Le. suppliers, distebuted network » ANDI + ¢ 7? Like Davies el. (2014) the xed element of the rato Fis weighted by the salable pice foramen ees (E couse (3600400, Fe Fy? ‘60p,) bad median gs () consumer (2360OEWA, Le, FMo — Fo/13600%). We use the mast fecent median typical domestic consumption values (BEI, 2oab, 202) [APUELPOV + ¥,X) and Confey) > 0, whete © ad vate‘operators and transmission network operators). Since the 1990s wave of privatisation and liberalisation, the “Big 6” suppliers have dominated the GB retall energy market with 7036 of consumers stil supplied by the five electricity incumbents and the single gas incumbent (0%, 2019) ‘The recall suppliers also pass on transmission and distribution network. costs charged by the regulated operators. The transmission and dist bution network operators are monopolies regulated bythe Office for Gas fand Electricity Markets (Ofgem, 2015). Three transmission operators (70s) own and operate the national transmission high pressure) gas and (high voltage) elecriity neworks. The low pressire and low voltage networks are split int fourteen electricity distribution networks (DNOS) and eight gas distribution networks (GDNS). Indeed, the mumber of [DNOs and GDNs correspond to the locations managed by the regional ‘4s and electricity boards that exist pre-privatsation (Ofgem, 2015). ‘The regulated pare of prices reflects the reglonal differences in costs Incurred by the nework operator. The instlonal and infrastructural legacy of GBs energy system allows ws to exploit the regional differences in regional gas and electricity pricing (marginal and fixed) — oftentimes called the “posteode lottery" (Deere al, 2020) in GB energy pricing ean be understood from two prevailing perspectives. On the one hand, according to Ofgen's study in 2015, differences in retail pricing are primarily attributed to and local network charges i. the cost of building and main taining che transmission and distribution network infrastructure (Ofgem, 2015). Ofgem’s report finds electricity network charges exert ‘greater influence on retall prices then gas network charges. Nonetheless, ‘Ofgem aeknowledges that whilst some regions exhibit higher distribu tional charges they are, in some instances, partly offer by lower tans mission charges. On the other han, Dies et». (2014) age that the key source of price dispersion, in given time period, s within. region (c 4. meributed 10 Sneumbent supplies) rather dhan Between regions (eg associated with legacy networks), In fat, Davies et al, (2014) find over {6396 ofthe variance in marginal pries an at least 82% ofthe variance in fixed charges can be explained by the variation within region. Their study farther suggests that asymmetric costs and other factors, including brand loyalty id market frictions, only partially influence price 0.1 7S the rele ate consent withthe use of cutrent prices (2018-2020) {rable AS,Appenae A) and one year lag ia pees (2017-2018) for brevity thse rents are avallable upon request a the seeond stege regressions). The complete set of IV results are presented in Table A2 (Appendix A The first stage regression results are contained in upper panel in ‘Table 3. The second stage regressions, which estimate the instrumented relationship between the fuel poverty Indieators and our thre sel reported measures of financial distress, are placed below. Column 1 presents the instrumented results forthe LINC indicator, followed by 710 in Colum 2 and finally IMEAT in Columns 3-4, The rests for LEHINDBULS, FINNOW and FINFUT are displayed a Panels A, B and C, respectively, As expocted, i the fist stage, increases in energy prices nerease the likelihood of fuel poverty. For example, according to the LIHC indicator, the probability of beng identified as fel poor (cf non fuel poor) increases between 0.87 and 2.92 percentage points given & respective £10/vear rise in Fo and Fs (Column, 1. Similarly, earning to EAT (Column 3), increasing Mand Me by 0.01p/kWh increases the probability of being fuel poor by round 7-4 and 0.87 percentage points respectively, on average, ceteris paribus. Actos all models, the strength ofthe instrumentsis markedly improved when fixed charges either enter exclusively of working as past of the FM rato Cable Table A2 Ap pendix A), ‘The first stage F statistic consistently greater that 10, itive with the Staiger aad Stork (1997) ruleoF thumb. However, they fal below the level of 104.7, which recent literature suggests the Fist stage F statistic should exceed (Lee et al, 2020). For each given Fstatstic therefore, we corect the eitical values and calculate" 0.05 standard errors” proposed by Lee tal. (2020: 21). Compared tothe tue standard errors, ie ot al. (2020) consider these values to be somewhat conser vative. Despite the conservative nature of this correction, the‘Tables IV (LPN segessions of financial stesso indcaors of fst poverty sing ‘prices (MFM) betes 2016 and 2014 URHLS tain sey Jnn/ 2018 Fe 2020), Spetienions @ @ @ (000) (0000) 008) (0.000), (ooo) ou) ey (0000) Secon tage ace Panel A Bei a bile (EHINDBIIS) (ory ao) aa, foosse —fonizls —[oaos}* (oso) Sipetiey as ane ouse an! Cen anc! anton (RNOM) (07s) (a0) (0099) waasse —[aowojer [hava (ova Sipe) 0509, osm ban Pal Pte onl ston (FELT) Princ 8259 00204 sas (oom) a7, (om) voosse (oo) nasa, fone) Ngee) 816 aon as N 2x0 maaie mai 210 Notes p= 01, %p = 005, sp < 0.01, Robust standard eosin parentheses All modes (fist and second stage) include economie and soo. demographic ‘controls and regional tine fed effects (Table A, Appel A). F denotes al poverty. M, Fand FM refer to marginal pies, fited charges and the fxd rnrgina ratio respesvey. The most relevant pars (he largest F Statistic ve ported in theists eresions) ot ofthe vad TVs (I pve) > 01 nthe second stage regressions) are presente here (ee Table A2, Appendix A, fr ‘complete table of 1 result). * Faure fine sitation ime hoizon is“ yar fiom ow" tactically significant findings remain so atthe 9% level." Homing in on the preferred specifications in Tle 3, fuel poverty ‘exerts. positive and significant impact on falling behind on bills Panel ‘A) and whether individuals consider their current financial situation to beat last dificult (Panel 8), These findings exhibit the same sign as ot baseline results and remain statistically significant atthe 54love when ‘employing the more conservative (0.05) standard errors. For example, according to the FPI0 indieatr, fel poverty inereass the probability of being behind on bis by 84.4 percentage points, on average, all else constant. In edition, the probability of finding current finances atleast 0 the (o (min fa 38} here is upward Dis, or upper Dound teres downward is that 1s [a0 (minfs1.s8*} 0 = 1). pcan be estinated as: of determination taken from the regression detent ot a] hee 5 eee the love ond bounding set canbe A 5 _a(p aye ji o(5 7) Bae= o (0-1) denotes the sample estimate of fusing Eq, (1) (Setting 8 = 0. Respectively, aud A represents the stpleeatinate of andthe co: efficient of determination obtained fom speciation (1 without con set contains the tue, therefore if ero falls within this bound the causal effect ean be interpreted as non statistically ‘Tobe 4 presents the bounding sts. For comparison purposes, the baseline estinaes 9 (serting 5~ 0) are taken from the regressions with controls as presented in Toble2, Oster’ approach consistently provides a lower bound to our baseline reslis for current measures of financial distress (BEHINDBILLS, FINNOW). In contrast, an upper bound is established relative tothe baseline estimates for expectations of future financial disres (FINFUT). All point estimates are statistically signif cant atleast atthe 59% level and the bounding sets do not contain zero. Inaddition, Toble 4 proses the estimated 8 that would be required ‘0 force the esa effect 1 be zero. "Tiss positive fo eurent measures of financial distress (BEHINDBILIS, FINNOW), consistent sith down ward bias, and ranges between 2 and 4.1. In contrast, 5 Is negative for FINEUT, inline with the upper bound estimated. In two out of three exses[6|excends 20 and 80, Therefore, altogete, since It ulikely {hat the selection on unobserved variables Is berween 2 and 80 times greater than the observed variables, and the bounded sets do not contain zero, the baseline results can be interpreted as robust to selection on 7 Oierwis, i the unobserved vavables ave of grete (lester) i tan the observed in explaining the outcomes then 8 > 1 (0 < = 1). Ob verge, Ose (2019's examination of edie published atop uma found Sc 1 hones sting = 1 provides a tae conservative approach. "me converse tue fr Pe.‘Table 4 ouaded repesions of financial dress on indents ffl poverty: UKHLS ‘main survey Jan/2018 Feb /2020). ey Bemomic 102 2021 105464 ‘Tables Baseline specification checks of (LPNO regressions of fancial estes on in dicatns of fel poverty UKHLS Main survey (Jan/2018 Feb /2020), Sectction a @ ® ‘Speienon o Fal pve or ie mo maT ‘een mg psoalny a ‘te (om Wve 3) Panel A Bhi on ile BEHINDBILS) io oon goss oes (om) oan) an) Henin nak"}. 0) feo = tooo tos, emaming hn cange duecion) 1.573 ame Lae Pal 8, Cuneta ston NNO) 7-0 four ret panes 07 (a7) (o015) oe Too Taos) (oa, Pong bis changer ection) 1261 am Lay Panel Pte onl ston" (REFUT) jun, ois gases aggre 7 a) aa14) a (noon toe) ania Pong bi changer ction) 699 3607 ‘Stadt vor in square brackets are botsttaped or 1000 replications 6 ae (Pe estimated sing Ose (7019s patel Stata Coe All nodes include feanomle and socio” demographic conuols and sepionl ime ted effets (Table A, Append A). * Bure finnelal sation tne holon ea yar fom now ‘mobserved variables. Moreover, i i insportant ro note that our IV estimates are consistent I we relax the underlying assumption that the bias arising from unob- ‘served varables isin the samediretion as the observed variables (or the ‘ze of the bias isso small the overall direction of bias is unphased). “Tle presents the estimate value of @* pon relaxing this assump ‘The significant IV estimates (Panels A and B) fll within the upper bound, As with the IV estimates, there is evidence to suggest that Fuel poverty has a deleterious impaet on current measures of financial distress (BEHINDBILLS, FINNOW) yet may not alter expectations of future financial distress since the FINFUT bounding sets include zero, 1 addition, the results from the msn strvey remin robust pon further sensitivity cheeks (Fable 5. We assess whether fuel poverty has & persistent effect on financial distress by including the lag (1) of fuel Poverty indicators this represents fuel poverty in iain survey Wave 9 Ganusry 2017-May 2019). Table 5 (Column 1) shows, as one may ‘expeet, that che coefficients are generally smaller chan in dhe “stati? models, not least because the Impact of fuel poverty Is somewhat attenuated overtime. The findings related falling behind on bills and ‘current finances remain statistically significant. Lags of fuel poverty provide some additional asurance that the direction ofthe effet flows from fuel poverty co financial distress rather than vice vest.” Like in the 1V results, the relationship between fuel poverty and expectations of future fiiancial distress is attentnted. This isa further indication that baseline findings relating fuel poverty to FINFUT may be picking up confounding factors. “To further assess potential confining variables, we draw upon wo ‘additional sets of controls: 1) subjeetive well-being (SWB) and psycho: logical distress (PD) CF sbe 5, Colum 2}; and 2) the Big 5 personality % Paice ad Pelenbug (2019) also we the lag to emphasise tha the d rection of causally rus om noneogalve bills to Bae! diss. (eo) a000) ‘o0a {0008} (0008) (0008) (oor) (or (ow Pace Caren Sania station FINNON) (000) (0007 (0008) 0007) (000%) (0008 foo) (oor aoe Fate ei situation (NFUT) (000) (oon (0005) (ean cao) (oon (oor Noses sp <1, "7p < 005, p< 0.01 Robust standard ear in pventeses Allmodesinckide economi and socio demographic cotels nd segiona/tine fied effets Table Ai, Append A. Speiieaton: (1) lags fel poverty in he bseline mode (Eq, 1}; (2)adds subjective wel being (SWB) and psyeholgiel distuss vaslabls (PD) to the baseline model (Eq (1); apd (3) ass the baseline model by including dhe ig personaly als sg answers povided fn UKHLS Wave 3—see Tle for variable deinen nana fuze situation dine holon ta ea fom now" traits (Table 5, Column 3). The variable descriptions are detailed in Table A6, We examine whether the relationship berween fuel poverty and financial distress i mediated by levels of psychological distress an life satisfaction. On the one hand, self reported financial distress has been associated with psyehologeal distress during the COVID-19 pandemic (Davies and Jones, 2020) and Wife satisfaction prior to and ding the financial ers (Keese, 2012 Aranpai et al, 2017. Om the other hand, snoted in Section 2, fe poverty has been reported to affect subjective measures of health and wel-being. The findings presented in Tale 9 (Column 2) show dhac the impact of fuel poverty on eurrent measures of financial distress (BEHINDBILLS, FINNOW) remains statistically sig cant (Panels A and 8). Whilst the link between objective indicators of fuel poverty and expectations of future financial distress (FINFUT) are riedined and consistent with the conehistons dav front the 1V est ‘aes, the relationship rennin statistically significant forthe subjective cator of fuel poverty ‘Toble 5 (Column 3) utilises data contained in the UKHLS Wave 3 (January 2011-May 2013), the only UKHLS survey containing the Big 5 personality alts — agreeableness, conscentiousness, extraversion, henrtiesm and openness, The Blg 5 personality traits are considered Important faecors for economic outcomes, including Hinata dstess (cu et al, 20155 Parise and Pejinenburg, 2019; Lio, 2020). alike SWB and PD, these controls ean be considered exogenous as they are-generlisable across the life course (ets 2015). The baseline Findings hold upon inclusion of the Big personality tats. Overall, there Is some evidence to suggest that the link becween ‘objective indicators of fuel poverty nnd FINFUT is attenuated by mea sures of subjective wellbeing and psychological distress. In comtast, there is no evidence to suggest this isthe same for subjective i ‘of fue poverty Hence, in ight of the V results, unobserved factors (eg internal temperatures) and/or slfasessed measurement error(s) may be driving the baseline association between subjective fuel poverty anid ‘expectations about faire finncial istess. Indeed, theres an arg rent forthe inelusion of now financial factors in order to subvert po tential biases related 10 self reported measures of financial distress (Geese, 2012; Kellsted eta, 2015). However, since the literature ds: cussed earller has established a causal link berween fuel poverty and ‘heath outcomes (see eg. Awavioryi Chuschill eth, 2020; Kaboul, 2020, these controls (SWB and PD) are clearly endogenous and stich ‘specification checks should be viewed with easton 3.4. Puel poverty financial dsiress and the COVID-19 pandemic ‘To investigate the relevance of fuel poverty during the current ‘cOVID:19 pandemic, we employ UKHLS' COVID-19 web surveys (Uni ‘versity of Essex, 2021). We ely on the surveys which tke place in Ape, May and July 2020 as those carred out in June and September 2020 do hot contain measures of Financial distes, 1s important 10 nove that these surveys map onto the peak, decline and trough of the frst wave of the pandemic. The munber of admissions to hospital peaks at 3,115 patients (7-day average) on 4th April 2020, followed by the 7-day average falling {0 1,199 patients on the 4th May 2020, which then starts to approach the trough of admissions by 4th July 2020 with numbers falling further to 216 patients (Hiv! Government, 2021). The 4th July 2020 coincides with the easing of national lockdown re striction in the UK fr example, salons and beauty services reopen on 13th July 2020 and the use of public anspor for nom essential journeys |s pormitted by 17th July 2020 ering BEHINDBILLS and INOW are iden ey. The time horizon for FINFUT changes from 1 ‘Tables ‘Summary statistics Sinan sues and fel poverty COVID-19 surveys vibes ‘cova cows cob9 (e020) ly 2030) Cat 200) Nr one eee ons Tine prod fac Nain survey nury 2018-Febroary 202) ver instar N 120s Hace 10298 ™ Rare financial station time horizon “month from now Te ey pf aes frm arin asthe umber of ebeervations decrees by 600 invidual,derfoe this speifcation i used a8 abuses check rather than baseline fing. We alo sed sunercal cognitive and verbal bry data taken hom Wave 3 (ee el, 2015 Lio, 2020), however these valales ae non genealsable across one's fe couse. Nonetheless, the elie ests renin intact upon their ilision and ate avalable upon request ey Bemomic 102 2021 105464 year 19 1 month. Table © shows that the proportion of individuals experiencing financial distress declines from April ro July 2020 In ine with the pandemie’s first wave coming to-an end, iividuals are idetified as fuel poor based on their responses and {information contained in the main survey data (Vabie 6. Although the COVID 19 surveys do not contain i this approach allows us to explore whether those individuals identified 1s fuel poor prior tothe pandemic are more likely to experience financial distress during the pandemic. Inthe COVID-19 regressions, we inelide time effects that represent the year in which the individual pariipates nthe main survey (Wave 10) inorder to control fr annual variation in energy bills, income and therefore fuel poverty. The proportion of individuals we identity as fuel por inthe main ey aresiilar across the April oly 2020 sample (Ihe 6). This is ported by the notable stability in the economie and socio. demographic statistics collected from the COVID19 surveys Clabie A? Appendix A. The controls collected for the baseline resus in the COVID-19 surveys matches those specified in Ea. (1) with the addition ofa variable controlling for individuals mandated to stay at Home in aecordnice with the UK's Coronaviras Job Retention Sebeme (GIRS) (obo N7, Appendix). This is erucal since CJRS helps feliate the transition into lockdown during the frst wave of the pandemic, supporting the households’ adjustment to the changes in living and ‘working arrangements at home. igs. AIC (Fable AB, Appendix A) below present the COVID-19, surveys lower bound (BEHINDBILLS, FINNOW) and upper bound (FIN PUT) according to Oser's (2019) approach as olined in Ba (9) Similar fo the results for the main survey, we generally find that fuel poverty continues 0 exert a positive iuence over finaneial distress during the pandemic. We also observe a similar pattern in terms ofthe objective fuel poverty indicators exhibiting smaller effects than the subjective ident.” Nonetheless, the confidence intervals presented in Figs, 14-16 suggest that the diferences across the first wave of the pandemic and prior to the pandemic (main survey) are statistically Insignificant. During these months, the cost of changes in electricity consumption atsibutable to working at home could be parly recovered by claims for tox relief for additional work-related expenses (around $6/ week). Moreover, expenditure on energy and other necessities is ind rectly supported through the UK's Coronavirus Job Retention Scheme for workers on furlough, which paid 80% ofthe regular wage of employed Individuals (up to £2500/month). Whilst these schemes provide further sssurance tha the energy bills and income information sed hereln are relevant tothe fist wave of the COVID.19 pase, they potentially worked effectively to dampen the financial impact on those emtified as fuel poor, relative to those not in fuel poverty, prior to the pandemic ‘Asa final robustness check, se restit the min survey onda participating in the COVID-19 May 2020 survey CTable A5, Column 2, Appens A)” There isa stark similarity inthe economic and statistical ance of the coefficients in Table AS (Column 2) and thse from the main survey (Inblo 2, Even Columns). This helps to avert concerns thar the overlap in the findings prior to and during the pandemic could arse from attrition or potential changes in the sample composition in the COVID-19 surveys 4. Discussion and conclusion Fuel poverty is an increasingly relevant dimension of soci = arsove, concer surounding the npc of a change in ae ori it alleviated bythe fet that the relationship between fe poverty ad FINFUT Similar eo the nin oarvey by the ed ofthe ist wave ofthe pnd "= Whilrthe rele are robust when reiting the sample to dndvidals parpating i eter Apel, May or July 202, only the ress fr May 2020 ie presented inthe Appendix for bevy. Res for Api ad Jly 2020 ate vallable upon request,deprivation whieh Is observed and monitored in many high income counties where economic inequality is persistent or even growing. In most ofthese countries polly measures ae in place to reduce the extent and the effets of this social inequity. These policies have achieved mixed results in the past deco the complex nnd mutimensional na ture ofthe issues being addressed by policy makers. The adoption of well targeted and effetive policy measures aims at tackling fuel poverty and its effects on the mental and physical wellbeing ofthe individuals who are affected by twill be even more important during the economic re covery from the current pandemic, as many households will have suf fered losses or reductions in income and potentially also inerases in ‘expenditure due tothe effet of lockdowns on mobility and travel, “This paper investigates the telationship between fuel poverty in ‘ierors (both objective and subjective) and self-reported measures of financial disuess. While fuel poverty in itself Isa source of conceen in society, Its brosder effets ate also conceening due t thelr potential Jong. term effect on health and wellbeing The literature on fel poverty, which has been briefly discussed in the pape, has identified link be tween fel poverty ad health outcomes and has suggested two potential pathways through whieh the link can be established. On dhe one hand the “living conditions” pathway could impact health, via anxiety and depression or as a result of insufficient thermal comfort. On the other ‘hand, the “financial security” pathway can afect individuals’ wellbeing ‘asa result of financial stress, This later relationship is investigated empirically in our paper based on the responses to nationally repre “sentative surveys of GB held between January 2018 and February 2020, ‘The responses to surveys run between March and May 2020 are instend used to extend the analysis tothe ently phases ofthe Covid-19 pandemic “The paper therefore offers an original contibution to knowledge by Investigating intermediate links within the recognised relationship be tween fuel poverty and health and wellbeing outeon Financial distress. Our results nee obvained sing econometric method. ted at dealing sith the effects of potential sources of ur results have identified a statistically sigifieant and positive ‘relationship between objective and subjetive mea ‘and current situations of financial distress among “The link between fuel poverty and expectations about future financial circumstances however is less statistically robust. Our results ate ‘confirmed, but not necessarily, strengthened for the Covid-19 period. Hence, according to our instmental variable estimates, those ‘entified as fuel poor find managing their curent finances more if cult yet are no more likely o think tha thelr financial situation willbe worse of in the ature, thas those who are not considered as fel poor. ‘This finding accords with seaeity theory, which predits that poverty leads to reinforcing behaviour (e.g. overborrowing) since “attention i allocated 10 the most pressing financial problems and needs. Fu Appendix A. Summary and other statistics ey Bemomic 102 2021 105464 needs loom far away.” (le Braj sel Antondes, 20215 10). Whilst scarcity inereases focus on limited resources, attentional focus on pressing present outgoings (e.g. utlty expenses, groceries, rent) nay come a the expense of neglecting future outgoings (Shale sl, 20125 Shalt el, 2018). This line of thought is consistent with (but does not necessarily imply) low income consumers behaving ax if they employ larger intemporal discount rates than high income consumers (ain, 19855 Lawrence, 1991; Shah et al, 20125 de Bruijn and Antonides, 202i) ‘The key policy impliations of our expisial analysis are that the evaluation ofthe effectiveness and potential benefits of policy measures simed at addressing situations of fuel poverty should be asvessed by taking ito consideration the avoidance of, oF reduction In, fnanetal distress among fet poor households, with indirect individual and so: cletal benefits in terms improved health and wellbeing outcomes. While fortunately the impaet of the fst wave of the COVID-19 pandemic does not seem to have significantly worsened the sicvation of financial distress among fuel poor households, this may be de o the extraord ‘ary support measaes pt in place by the Government andthe energy regulator inorder to mitigate the worst financial effets of the pandemie, nehuding a furlough scheme and a ban on evitions and disconnections. It is therefore important that any future policy of recovery from the pandemic continues to shelter these vulnerable individuals in order to sake sure that any adverse impact of financial distress and eventually health has not simply been delayed through the exiting measures. Indeed, Notions! Emery’ Action (20700) has argued for ually debt re form in order to protect households, energy suppliers and the economy from the “gathering storm” of uility debt that has been either been exacerbated or newly accrued during the pandemic. Looking, more broadly to the energy and environmental policy Jandsenpe, itis important o point ou hat the recently adopted net zero objectives and the associated strategies aimed ac meeting them noed to {ake into account the potential implications for individuals who find themselves in fuel poverty or are at risk of it Indeed, the ambitious environmental objectives currently being adopted by many countries ‘ight actually increase the risk of excluding pats of society from access ‘oaffordable fuels and appliances, oreven of eliciting the exploitation of| le most vulnerable in society ifthey are unable o take advantage ofthe stainable and energy efficient technologies that will make the achievement of those objectives possible. Acknowledgemens ‘The authors thank Professor Catherine Waddans Price for the help suggestions, and the guest editor and two referees for very helpful ‘able AL ‘ontol variable definitions and summay statistics URKLS: ain survey Jan/2018-Feb/2020), “Sicioooomie on demeapio aor ‘get yee sae vs SINGLE 1 ifn @ahewte a7 er 1 fone ei 0 atherwe b.i08 ‘| (CSE ALEVEL SE veo tere 400 50 Noguas 1 fa qaitentonor bse questo; thre a aa (cot on np)‘able At (comin) ey Bemomic 102 2021 105464 ace 1 ities Ooteneie 0s? m2 ome 1 ifoter 0 terse 004s 208 oven 1 ifemploed Oaereie oer ie srarmioven 1 iadtemplye 0 here 8 oar serneD 1ifveutet: ature 0280 oo omnsrarus 1 fete jb at tbrwie one oa west 1ifsspndet ive the North Wes of Erlend 0 ote ono ais ‘WaDLANDS | 1ifesponden isthe We Mad, Dede oon 257 est 1ifespnden ies the Eso and, 0 otase 0095, 208 ‘swest 1 if respondent tives inthe South West of Enland, @ otherwise a9 288 walss 1 ifrependent tern the Wale O there 0070 oa “Table 2 1V CM) regression of financial estes on Incas of fuel poverty using pies QM, F, FMD between 2016 and 2018; UKHLS main survey (an/2018 Feb/2020) ‘ecient meee cr o oo oo ® o Fiotvape concen 0) (e377) G40) (one) (0400) (2008) (0000) (295), (54) (000) 25 (O57) Ooo} 0270) (OA —(OOD).—_(0.8) Papel A Bei on ile (BEKINDBIAS) e . (ore) (0102), (G.06) (0125) (OOH), (O06) (OB), (OA)—_(0155) ones foams)" oan (assay (anaes tose (aris Tea” fexiayss —(ea7ey Sipsstes oor 0768 Gast Oona dor OG 000 Pagel 8, Cretan ston NNO) i - Pater ozs oer" asst ons age zea oasos* —ogsi™ aaa (era oom | eo) (oom) — (aos) (ore) (or08) (ows (aI) 100s se Wish wow)” — ass (O18) ora — ow fours ow” (0430) Siprete) oe ost Gas ous sat am a8 Panel Pte Sn eaten" (EAFLT) (16) oy — Gos) OI a — wa) (OIBS— (OUI) ‘Faas se (o1s7) tom — {eas} [0140] TooRI fam} fone] Toate (0432) Sipsaiee fan outed) Oe ows sot aa aa ae " wmo zo sai zs210 sao salon 2azI0 28210 None =p <0, "p< O06, "Hp < OOF, Robust standard eos in parentheses AT models (ist and second aga neludeecononiandsolo demogiaphi ono and reploaal tine fed eff. * ute ian sittin tie hotion sa yea rom now" “Table A 1V (LOM) regressions of financial eistess on indicators of fuel poverty using pies (M,F, PM) between 2018: UKHLS main survey Jan/2018-Feb/2020), pct oo @ On el oo @ o Print ne mo. ear G86 (O00) (00K). (Odo) OHH) L.A) OOH) (Goud on ner?)(Ate ey Bemomic 102 2021 105464 ‘Table A3 (comme) Seca oe a oe oa @ o Frintcr ne imo. ear (359 (0000) (198) 0595) (0009) O10) GOasZ) (OOM) Second age cof tA Gein on il BEHINDBIAS) Pca a oe asa nem gies 757 (ors) (oo%) 08) (eae) (0085) on) aT, stpratee ‘tooo’ 0105" 0022” m0” bo toc.” bon 000. Pal 8, Cretan ston NNO) nie ers ons zor mts oars ara aes on (O10) (0080) oH) UM) HI) (OL tpt ozs se" a2” 0IBs ost oars arm ssn Panel tre nc ston” (ROFL) (0135) (0205) (0.094) as) (aast) (ass) 38) 1) pate oie 221” sto” OoI6 01a tase oom Os " zz 20 asa aziz zsato azn zazt0— zt Notes p WS Pemeniod ‘cai etic "genta y die debi oor wba) Dies eit ‘eon! bl by det eit or ote me) Prepayment (tr ncaa govern snes eqn uh payments) Die dei + ed amount ech month by nani eer ‘mony by et eat or ote mead epee Pepyest ete (pays You gow y/ead) "UKHLS separates the Sou ato South Eas an South West, Southern data ot matchedey Bemomic 102 2021 105464 BEI doesnot collet gas price data for MI, deefore GB only, We use te most eeent median typical domestic consumption values (8S, 2021, 20210 ‘Table B2 Definitions and summary sists — instrumental variables Yarubie Deion Men => = “as and slope (18-2020) Pe “Anal ein average marl ape (8) oom cou ona Fe “Antal esol eet ed gs cate x) fazs 10670088 File Gar xml ao per epeamtatve comumer wih media comumpton of 13008WE« Fly =Fy/SHOOR, «ITS. «GOTB (5 Pe ‘on eploa rsnge marin! ewe ce A) 3 aon z Sono repo rerage aed leceicy charge (ye) uso 5350 ost Tr etic moral a per eresetave comune! wid nts coupon of 00K Le Fe F/3600% MOIST as ant eleiiy pie (2016-2018) Fo ‘Aon esona vege marzo as puke (AWD) oor cons ost fe ‘Antal ginal areas Bed ps cate ys?) ws. 3oas7 oot Fig Garmin oper epee commer wih media comunpton of 13008WEe Fy =Fu/SKOOR, IT). 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