Equity and Energy

Arguing that the energy price policies of the 1970s represented a major equity/efficiency trade-off and led to a dramatic deterioration in the living standard of lower income households, the authors of this book present a comprehensive data-based assessment of the plight of lower income households during the decade of 1973-1983. After a general review of the recessionary and inflationary impact of rising energy prices on the national economy, they present detailed empirical assessments of three trends adversely affecting lower income households: (1) the rising share of household energy expenditures as a percentage of household income and the failure of income transfer programs to offset losses in purchasing power; (2) the rapid increase in energy-related operating costs in lower income rental housing and the coincident decline in the quality of housing; and (3) the rapid increase in energy-related operating costs of local governments which strained local fiscal resources and led to a cutback in the provision of redistributive services (such as health, education, and welfare) and a shift toward regressive taxes. The authors conclude that damage to the national economy and to the living standards of lower income households remains severe; price trends of the 1980s, they emphasize, represent only slight moderations of earlier trends, while the vulnerability to future energy price shocks has been reduced very little. The need for effective policy responses is even greater now than in the first decade of the energy crisis.