Microeconomics and the demand for space heating

The techniques of economic utility theory are combined with the technical equations for heat loss from a dwelling to give insight into the variation of consumer demand for space heating. A theoretical relationship is established between the performance of the occupied dwelling as the external temperature falls and the short-run income elasticity of energy demand. The analysis is applied to studies of U.K. heating practice in the 1950s and the implied indifference map for thermal comfort deduced. This indifference map is found to show a considerable economic propensity to absorb some of the potential savings from energy conservation measurements in higher internal temperatures. The effect found is sufficiently large to have consequences for future energy planning if it were still present in the U.K. domestic sector. The analysis highlights a number of points which should aid the interpretation of field experiments on domestic energy consumption. In particular, it is shown that unless great care is taken to separate out the technical and economic origins of internal temperature variation, the results of field studies on the effectiveness of conservation techniques may only be of shortlived value.