Publication detail

Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases

Author(s): prof. PhDr. Tomáš Havránek Ph.D., Tomáš Vlach
doc. PhDr. Zuzana Havránková Ph.D., Tomáš Vlach
Type: IES Working Papers
Year: 2017
Number: 2
Published in: IES Working Papers 02/2017
Publishing place: Prague
Keywords: Water demand, income elasticity, meta-analysis, publication bias, Bayesian model averaging
JEL codes: C83, Q25
Suggested Citation: Havranek T., Irsova Z., Vlach T.(2017). ”Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases” IES Working Paper 2/2017. IES FSV. Charles University.
Grants: GACR 15-02411S Development and Applications of Meta-Regression Methods in Economics
Abstract: We present the first meta-analysis of the income elasticity of water demand that accounts for the effects of publication selection (the preferential reporting of estimates that are in- tuitive and statistically significant). Paradoxically, more affected by publication selection are the otherwise preferable estimates that control for endogeneity. Because such estimates tend to be smaller and less precise, they are often statistically insignificant, which leads to more intense specification searching and bias. Correcting simultaneously for publication and endogeneity biases, we find that the underlying elasticity is approximately 0.15 or less. The result is robust to controlling for 30 other characteristics of the estimates and using Bayesian model averaging to account for model uncertainty. The differences in the reported estimates are systematically driven by differences in the tariff structure, regional coverage, data granularity, and control for temperature in the demand equation.
Downloadable: wp_2017_02_havranek_irsova
February 2023




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