A new distributional based indicator to measure energy poverty in Italy

Energy poverty refers to a situation where households struggle to access or afford essential energy services needed for daily living-such as heating, cooling, lighting, and cooking. Traditionally, this issue is evaluated using a fixed lower bound for the energy expenditure, commonly set at 10% of household income. In response to these concerns, the current study questions the effectiveness of fixed thresholds and introduces an alternative, data-driven methodology. This technique enables the identification of endogenous threshold points that accurately reflect the heterogeneity in household energy spending distributions. Furthermore, we enhance the estimation of energy poverty by combining these endogenous thresholds with a measure of economic vulnerability. This statistical framework enables the definition of a new energy poverty indicator defined as the joint probability that energy expenditure exceeds the endogenous threshold and non-energy expenditure falls below 60% of the national median. This offers a probabilistic assessment of energy poverty. Using data from the Italian National Institute of Statistics (ISTAT), specifically the Household Budget Survey (HBS), for the years 2019-2023, the analysis of energy indicator reveals that energy poverty is prevalent mainly in Southern regions of Italy. Furthermore, a spatial analysis covering the period 2019-2022 is conducted to explore the regional drivers of energy poverty.