🤖 AI Summary
This study addresses a central assumption in decarbonization policy—that electricity demand has become more responsive to price signals due to advances in smart metering, automation, and energy storage—yet empirical evidence remains scarce. Leveraging 4,720 own-price elasticity estimates from 462 studies spanning 1934 to 2024, the authors construct the first large-scale meta-analytic dataset covering nine decades. Employing identification-quality grading and publication-bias correction methods, they systematically assess temporal trends in price elasticity. Findings reveal a mean short-run elasticity of –0.16, which declines to –0.09 (statistically insignificant) under high-identification designs; long-run elasticity averages –0.38 but shows no upward trend over time. Notably, demand responsiveness is weaker—not stronger—in high-technology contexts, challenging prevailing policy expectations.
📝 Abstract
Energy planners have long assumed that electricity demand will grow more price-responsive as metering, automation, and storage spread, an assumption now embedded in decarbonization plans. We test it against the empirical record: 4,720 own-price elasticity estimates from 462 studies, with data spanning 1934-2024, ranked on a single ladder of identification quality from naive regressions to randomized experiments. Three findings emerge. First, the best-identified studies find smaller responses than naive ones: the publication-bias-corrected short-run elasticity is about -0.16 (a 10% rise in the electricity price cuts consumption by under 2%), and only -0.09 among the best-identified studies, whose adjusted value is statistically indistinguishable from zero. Second, responsiveness grows with time to adjust, roughly doubling from -0.16 in the short run to -0.38 in the long run as the capital stock turns over, but this pattern has itself been stable for decades. Third, and most important, responsiveness shows no upward trend across nine decades of data; if anything, the most technology-rich settings, including time-of-use pricing, are the least price-responsive in total consumption. Prices alone have not made total electricity consumption more responsive; broader demand flexibility will have to be engineered and paid for, through enabling technology, contracts, and program design.