Empowering networks: Social capital as informal insurance against energy poverty

Abstract

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Research on energy poverty has mainly focused on socioeconomic and structural determinants, while the role of social capital has received much less attention. This is particularly relevant for highly disadvantaged households, for whom informal support networks may represent an important source of protection when formal policy support is limited. We draw on the Journeys Home survey, a unique longitudinal dataset of Australians experiencing severe economic disadvantage, to examine whether social capital affects the dynamics of energy poverty. To account for state dependence, we estimate dynamic models based on Wooldridge's conditional likelihood approach for binary outcomes and complementary two-step GMM specifications. Considering two complementary measures of individual social capital, we find that a one-standard-deviation increase in perceived informal support reduces the probability of experiencing energy poverty by 4.8 percentage points, while an equivalent increase in social connectedness is associated with a 2.6 percentage-point reduction. These findings suggest that social capital can complement conventional policy measures in reducing energy poverty among vulnerable households.