To combat the harmful effects of indoor air pollution, there’s an urgent need for more efficient cooking stoves that run on clean energy sources. Like many rural regions of developing countries, rural India lacks a reliable power supply – so the most viable alternative to a wood fire is a gas stove. Since liquefied petroleum gas (LPG) was introduced in the 1970s, its use has surged, especially in urban areas. However, rural Indian households still rely heavily on biomass-based fuels. According to a recent survey of rural households in some of India’s poorest states, only 37% of households used LPG as their main cooking fuel in 2018
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Of the many reasons why households in India are reluctant to switch from firewood to gas, two stand out: First, LPG cylinders are still not readily available in all regions. Second, cooking with LPG is still more expensive, even though it has been subsidised by central government for many years.
Influenced by friends and neighbours
Together with my colleague Stefano Carattini from Georgia State University, I’ve spent the past five years investigating the extent to which Indian households influence each other in adopting LPG. Experts speak of “social spillovers” when households are positively influenced in their purchasing decisions by other households from the same village or urban block (e.g. “I’m more likely to buy LPG if my neighbours do so”).
We’ve observed just such an effect
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, and interestingly, it’s particularly salient for households that are members of certain kinds of social networks: women’s groups, agricultural cooperatives and NGOs play a key role in speeding up the transition to LPG. In India, such social networks play a crucial role in influencing people’s behaviour in many facets of life, including their consumption decisions. In this case, we believe that the social spillovers are largely due to the fact that information on the benefits (and costs) of LPG is particularly well disseminated within such networks.
An efficient policy instrument
If households are to change to and stick to using LPG, it must be both accessible and affordable. To encourage the poorest households to switch, subsidies are likely to be essential. However, for a country like India, relying exclusively on subsidies is problematic in the long run. For one thing, subsidies lead to high public spending, which places a heavy burden on an already strained national budget. Secondly, abolishing subsidies once they have been granted can invoke opposition from the burgeoning middle class that benefits from them.
