RT Journal Article
SR Electronic
T1 Measuring the Income Elasticity of Water Demand: The Importance of Publication and Endogeneity Biases
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 259
OP 283
DO 10.3368/le.94.2.259
VO 94
IS 2
A1 Havranek, Tomas
A1 Irsova, Zuzana
A1 Vlach, Tomas
YR 2018
UL http://le.uwpress.org/content/94/2/259.abstract
AB We present the first study that examines the effects of publication selection in the literature estimating the income elasticity of water demand. Paradoxically, more affected by publication selection are the otherwise preferable estimates that control for endogeneity. Attempting to correct simultaneously for publication and endogeneity biases, we find that the mean underlying elasticity is approximately 0.15 or less. The result is robust to controlling for more than 30 characteristics of the estimates and accounting 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. (JEL C83, Q25)