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Calculate Net Energy Return (Nh)

Source: R/energy_ratios.R
ner_func.Rd

Calculates the Net Energy Return using the formula Nh = (G - S) / Se, where G is gross income, S is energy spending, and Se is effective energy spending. This metric is the preferred aggregation variable as it properly accounts for harmonic mean behavior when aggregating across households.

Usage

ner_func(g, s, se = NULL)

Arguments

g

Numeric vector of gross income values

s

Numeric vector of energy spending values

se

Optional numeric vector of effective energy spending (defaults to s)

Value

Numeric vector of Net Energy Return (Nh) values

Details

The Net Energy Return is mathematically related to energy burden by: E_b = 1 / (Nh + 1), or equivalently: Nh = (1/E_b) - 1

Why use Nh for aggregation?

For individual household data, the Nh method enables simple arithmetic weighted mean aggregation:

  • Via Nh: neb = 1 / (1 + weighted.mean(nh, weights)) (arithmetic mean)

  • Direct EB: neb = 1 / weighted.mean(1/eb, weights) (harmonic mean)

Computational advantages of the arithmetic mean approach:

  1. Simpler to compute - Uses standard weighted.mean() function

  2. More numerically stable - Avoids division by very small EB values (e.g., 0.01)

  3. More interpretable - "Average net return per dollar spent on energy"

  4. Prevents errors - Makes it obvious you can't use arithmetic mean on EB directly

For cohort data (pre-aggregated totals), direct calculation sum(S)/sum(G) is mathematically equivalent to the Nh method but simpler.

The 6% energy burden poverty threshold corresponds to Nh \(\ge\) 15.67.

Examples

# Calculate Net Energy Return
gross_income <- 50000
energy_spending <- 3000
nh <- ner_func(gross_income, energy_spending)

# Convert back to energy burden
energy_burden <- 1 / (nh + 1)