IDEAS home Printed from https://ideas.repec.org/a/aen/journl/ej38-6-xiaoping.html
   My bibliography  Save this article

Why Consumers Switch Energy Suppliers: The Role of Individual Attitudes

Author

Listed:
  • Xiaoping He
  • David Reiner

Abstract

Since 2008, fewer customers switched suppliers in British electricity and gas markets despite the potential for financial gains, suggesting that psychological factors may affect switching behaviors. Using a unique nation-wide British survey, we explore the influence of consumers' attitudes and perceptions on switching behaviors and assess the differences in switching propensity across different groups. Support for simplifying energy tariffs, professed less difficulty in understanding energy bills, expected difficulty in changing suppliers and lack of attention to the issue of energy prices are associated with lower switching activity. At a time of high saliency, political party voting intention was strongly related to switching. Unlike the bivariate analyses conducted by the regulator and the competition authority, our multivariate analysis show few demographic factors affect the likelihood of switching except for educational attainment and tariff payment patterns. Remedies aiming to encourage switching cannot be targeted correctly unless the supporting analysis is robust to alternative model specifications.

Suggested Citation

  • Xiaoping He & David Reiner, 2017. "Why Consumers Switch Energy Suppliers: The Role of Individual Attitudes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
    • Handle: RePEc:aen:journl:ej38-6-xiaoping
    as

    Download full text from publisher

    File URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=3001
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nicholas Economides & Katja Seim & V. Brian Viard, 2008. "Quantifying the benefits of entry into local phone service," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 699-730, September.
    2. Catherine Waddams Price, 2005. "The Effect of Liberalizing UK Retail Energy Markets on Consumers," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(1), pages 128-144, Spring.
    3. Paul L. Joskow, 2008. "Lessons Learned from Electricity Market Liberalization," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 9-42.
    4. Littlechild, S.C., 2000. "Why We Need Electricity Retailers: A Reply to Joskow on Wholesale Spot Price pass-through," Cambridge Working Papers in Economics 0008, Faculty of Economics, University of Cambridge.
    5. Ek, Kristina & Söderholm, Patrik, 2008. "Households' switching behavior between electricity suppliers in Sweden," Utilities Policy, Elsevier, vol. 16(4), pages 254-261, December.
    6. Monica Giulietti & Jesus Otero & Michael Waterson, 2010. "Pricing behaviour under competition in the UK electricity supply industry," Oxford Economic Papers, Oxford University Press, vol. 62(3), pages 478-503, July.
    7. Defeuilley, Christophe, 2009. "Retail competition in electricity markets," Energy Policy, Elsevier, vol. 37(2), pages 377-386, February.
    8. Tooraj Jamasb and Michael Pollitt, 2005. "Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 11-42.
    9. Catherine Waddams Price & Minyan Zhu, 2016. "Empirical Evidence Of Consumer Response In Regulated Markets," Journal of Competition Law and Economics, Oxford University Press, vol. 12(1), pages 113-149.
    10. Wirtz, Jochen & Xiao, Ping & Chiang, Jeongwen & Malhotra, Naresh, 2014. "Contrasting the Drivers of Switching Intent and Switching Behavior in Contractual Service Settings," Journal of Retailing, Elsevier, vol. 90(4), pages 463-480.
    11. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    12. McDaniel, Tanga M. & Groothuis, Peter A., 2012. "Retail competition in electricity supply—Survey results in North Carolina," Energy Policy, Elsevier, vol. 48(C), pages 315-321.
    13. Chris M. Wilson & Catherine Waddams Price, 2010. "Do consumers switch to the best supplier?," Oxford Economic Papers, Oxford University Press, vol. 62(4), pages 647-668, October.
    14. Brutscher, P., 2011. "Payment Matters? - An Exploratory Study into the Pre-Payment Electricity Metering," Cambridge Working Papers in Economics 1124, Faculty of Economics, University of Cambridge.
    15. Catherine Waddams Price & Catherine Webster & Minyan Zhu, 2013. "Searching and Switching: Empirical estimates of consumer behaviour in regulated markets," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2013-11, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    16. Stefania Sitzia & Jiwei Zheng & Daniel Zizzo, 2015. "Inattentive consumers in markets for services," Theory and Decision, Springer, vol. 79(2), pages 307-332, September.
    17. Philipp-Bastian Brutscher, 2011. "Payment Matters? – An Exploratory Study into Pre-Payment Electricity Metering," Working Papers EPRG 1108, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    18. Gamble, Amelie & Juliusson, E. Asgeir & Gärling, Tommy, 2009. "Consumer attitudes towards switching supplier in three deregulated markets," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 814-819, October.
    19. Monica Giulietti & Catherine Waddams Price & Michael Waterson, 2005. "Consumer Choice and Competition Policy: a Study of UK Energy Markets," Economic Journal, Royal Economic Society, vol. 115(506), pages 949-968, October.
    20. Yang, Yingkui, 2014. "Understanding household switching behavior in the retail electricity market," Energy Policy, Elsevier, vol. 69(C), pages 406-414.
    21. Littlechild, Stephen, 2009. "Retail competition in electricity markets -- expectations, outcomes and economics," Energy Policy, Elsevier, vol. 37(2), pages 759-763, February.
    22. Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, vol. 93(1), pages 297-310, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xiaoping He & David Reiner, 2015. "Why Do More British Consumers Not Switch Energy Suppliers? The Role of Individual Attitudes," Working Papers EPRG 1515, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Fontana, Magda & Iori, Martina & Nava, Consuelo Rubina, 2019. "Switching behavior in the Italian electricity retail market: Logistic and mixed effect Bayesian estimations of consumer choice," Energy Policy, Elsevier, vol. 129(C), pages 339-351.
    3. Esplin, Ryan & Best, Rohan & Scranton, Jessica & Chai, Andreas, 2022. "Who pays the loyalty tax? The relationship between socioeconomic status and switching in Australia's retail electricity markets," Energy Policy, Elsevier, vol. 164(C).
    4. Xiaoping He & David Reiner, 2018. "Consumer Engagement in Energy Markets: The Role of Information and Knowledge," Working Papers EPRG 1835, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Silvia Concettini & Anna Creti, 2013. "Liberalization of electricity retailing in Europe: coming back or going forth?," Working Papers hal-00915924, HAL.
    6. Muyi Yang & Yuanying Chi & Kristy Mamaril & Adam Berry & Xunpeng Shi & Liming Zhu, 2020. "Communication-Based Approach for Promoting Energy Consumer Switching: Some Evidence from Ofgem’s Database Trials in the United Kingdom," Energies, MDPI, vol. 13(19), pages 1-16, October.
    7. Stefania Sitzia & Jiwei Zheng & Daniel Zizzo, 2015. "Inattentive consumers in markets for services," Theory and Decision, Springer, vol. 79(2), pages 307-332, September.
    8. Daglish, Toby, 2015. "Consumer Governance in Electricity Markets," Working Paper Series 4183, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    9. Daglish, Toby, 2016. "Consumer governance in electricity markets," Energy Economics, Elsevier, vol. 56(C), pages 326-337.
    10. Erdogan, Murside Rabia & Camgoz, Selin Metin & Karan, Mehmet Baha & Berument, M. Hakan, 2022. "The switching behavior of large-scale electricity consumers in The Turkish electricity retail market," Energy Policy, Elsevier, vol. 160(C).
    11. Schleich, Joachim & Faure, Corinne & Gassmann, Xavier, 2017. "Household electricity contract and provider switching in the EU," Working Papers "Sustainability and Innovation" S14/2017, Fraunhofer Institute for Systems and Innovation Research (ISI).
    12. Vesterberg, Mattias, 2018. "The effect of price on electricity contract choice," Energy Economics, Elsevier, vol. 69(C), pages 59-70.
    13. Feldhaus, Christoph & Lingens, Jörg & Löschel, Andreas & Zunker, Gerald, 2022. "Encouraging consumer activity through automatic switching of the electricity contract - A field experiment," Energy Policy, Elsevier, vol. 164(C).
    14. Ndebele, Tom & Marsh, Dan & Scarpa, Riccardo, 2019. "Consumer switching in retail electricity markets: Is price all that matters?," Energy Economics, Elsevier, vol. 83(C), pages 88-103.
    15. Calzada, Joan & García-Mariñoso, Begoña & Suárez, David, 2023. "Do telecommunications prices depend on consumer engagement?," Information Economics and Policy, Elsevier, vol. 62(C).
    16. Itaoka, Kenshi & Chapman, Andrew & Farabi-Asl, Hadi, 2022. "Underpinnings of consumer preferences and participation in Japan's liberalized energy market," Utilities Policy, Elsevier, vol. 76(C).
    17. Hussain, Shahid & Seet, Pi-Shen & Ryan, Maria & Iranmanesh, Mohammad & Cripps, Helen & Salam, Abdul, 2022. "Determinants of switching intention in the electricity markets - An integrated structural model approach," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).
    18. Peter D. Lunn & Marek Bohacek, 2017. "Price transparency in residential electricity: Experiments for regulatory policy," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 1(2), pages 31-37, September.
    19. Poupeau, François-Mathieu, 2009. "Domestic customers and reform of the gas sector. An organisational sociology perspective," Energy Policy, Elsevier, vol. 37(12), pages 5385-5392, December.
    20. Peter D., Lunn & Sean, Lyons, 2017. "Consumer switching intentions for telecoms services: evidence from Ireland," MPRA Paper 77412, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:journl:ej38-6-xiaoping. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: David Williams (email available below). General contact details of provider: https://edirc.repec.org/data/iaeeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.