Household Electricity Approach - Formula

Formula

1nE + I = α11nCi + α2Gi + α4Qi + αHi + α6
Hi = β1Ti + β2(Si – Ti) + β3Di
β1>0 β2 <0 β3 >0

where:

i : the number assigned to the country
Ei : per capita household electricity consumption in country i in Mtoe
Ci : per capita real consumption of households without the consumption of electricity in country i in US dollars( purchasing parity)
PRi : the real price of consumption of 1kwh of residential electricity in US dollars(at purchasing parity)
Gi : the relative frequency of months with the need of heating in houses in country i
Qi : the ratio of energy sources other than electric energy to all energy sources in household energy consumption
Hi : the per capita output of the hidden economy
Ti : the ratio of the sum of paid personal income, corporate profit and taxes on goods and services to GDP
Si : the ratio of public social welfare expenditures to GDP
Di : the sum of number of dependants over 14 years and of inactive earners, both per 100 active earners
(Lacko 1998, p. 133)

After the total electricity consumption of households has been determined, the next step is to proceed to find the informal economy’s contribution to the GDP of a country (Lacko 1998, p. 140). To create this index, Lacko had to determine a way to calculate how much GDP is produced by one unit of electricity (Lacko 1998, p. 140). This was done by taking known estimations of a market economy and making comparisons with this to another approach (Lacko 1998, p. 140).

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