Is there a heat or eat trade-off in the UK.pdfVIP

Is there a “heat or eat”trade-off in the UK? IFS Working Paper 09/11 Timothy K.M. Beatty Laura Blow Thomas F. Crossley Is There a Heat or Eat Trade-o in the UK? Timothy K.M. Beatty Laura Blow University of Minnesota Institute for Fiscal Stuides Institute for Fiscal Studies Thomas F. Crossley Koc University Institute for Fiscal Studies University of Cambridge Abstract We merge detailed household level expenditure data from older households with historical local weather information. We then test for a heat or eat trade o: do houseolds cut back on food spending to nance the additional cost of keeping warm duing cold shocks? We nd evidence that the poorest of older households are unable to smooth spending over the worst temperature shocks. Statistically signicant reductions in food spending are observed in response to temperatures two or more standard deviations colder than expected (which occur about one winter month in forty) and reductions in food expenditure are considerably larger in poorer households. 1 1 Introduction 2 1 Introduction In recent winters, media outlets reported that unseasonable weather and rising energy costs forced elderly households in the United Kingdom to choose between heating and eating.123 In other words, households were said to be forgoing food to pay for the increased cost of staying warm. In this paper, we study the empirical evidence for a heat or eat trade-o in the United Kingdom. We model temperature shocks using historical regional weather data. We then merge estimated temperature shocks with UK household expenditure data in order to study older households response to unus