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Appliance Standards and the Welfare of Poor Families

Sutherland recently described U.S. federal appliance standards as causing a welfare loss that falls "particularly heavily on poor families." He attributed this loss to their risk aversion and to their being forced to invest at a discount rate of 7%. This note estimates the loss caused by this risk aversion at less than eight cents per year in the case of the 1993 refrigerator standard, and documents that standards have not been designed with the intention of forcing consumers to invest at a 7% discount rate.

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Energy Specializations: Electricity – Policy and Regulation; Energy Access – Energy Poverty and Equity

JEL Codes:
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

Keywords: Appliance standards, Welfare, Energy poverty, US

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No4-8

Published in Volume14, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.