Structural and index decomposition analyses allow identifying the main drivers of observed changes over time of energy and environmental impacts. These decomposition analyses have become very popular in recent decades and, many alternative methods to implement them have become available. Several of the most popular methods have been developed earlier in index number theory, a context in which each particular method is defined by adhering to a set of properties. The goal of the present paper is to review the main results of index number theory and discuss its connection to decomposition analyses. By doing so, we can present a decision tree that allows users to choose a decomposition method that meets desired properties. We report as hands-on example an empirical case study of the carbon footprint of the Netherlands in the period 2004–2005.

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Econometric Institute Reprint Series
Economic Systems Research
Department of Econometrics

de Boer, P., & Rodrigues, J.F.D. (João F. D.). (2019). Decomposition analysis: when to use which method?. Economic Systems Research. doi:10.1080/09535314.2019.1652571