Formula
1nE + I = α11nCi + α2Gi + α4Qi + αHi + α6Hi = 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).
Read more about this topic: Household Electricity Approach
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