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Dynamic Salience with Intermittent Billing: Evidence from Smart Electricity Meters

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  • Ben Gilbert
  • Joshua S. Graff Zivin

Abstract

Digital tracking and the proliferation of automated payments have made intermittent billing more commonplace, and the frequency at which consumers receive price, quantity, or total expenditure signals may distort their choices. This category of goods has expanded from household utilities, toll road access and software downloads to standard consumption goods paid by credit card or other "bill-me-later"-type systems. Yet we know surprisingly little about how these payment patterns affect decisions. This paper exploits hourly household electricity consumption data collected by "smart" electricity meters to examine dynamic consumer behavior under intermittent expenditure signals. Households reduce consumption by 0.6% to 1% following receipt of an electricity bill, but the response varies considerably by household type and season. Our results also suggest that spending "reminders" can reduce peak demand, particularly during summer months. We discuss the implications for energy policy when intermittent billing combined with inattention induces consumption cycles.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19510.

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Date of creation: Oct 2013
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Handle: RePEc:nbr:nberwo:19510

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  1. Michael D. Grubb & Matthew Osborne, 2012. "Cellular Service Demand: Biased Beliefs, Learning, and Bill Shock," Boston College Working Papers in Economics 829, Boston College Department of Economics.
  2. Amy Finkelstein, 2007. "E-ZTax: Tax Salience and Tax Rates," NBER Working Papers 12924, National Bureau of Economic Research, Inc.
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Cited by:
  1. Mette Trier Damgaard & Christina Gravert, 2014. "Now or never! The effect of deadlines on charitable giving: Evidence from a natural field experiment," Economics Working Papers 2014-03, School of Economics and Management, University of Aarhus.

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