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Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa

Author

Listed:
  • B. Kelsey Jack
  • Grant Smith

Abstract

High rates of customer default on utility bills present a barrier to the expansion of electricity access in the developing world. Pre-paid electricity metering offers a technological solution to ensuring timely payment. Using an eleven-year panel of pre-paid electricity customers in Cape Town, South Africa, we describe patterns of purchase behavior across property values, our measure of socioeconomic status. Poorer households buy electricity more often, in smaller increments, and are most likely to buy on payday. These patterns suggest difficulties smoothing income, and reveal a preference for small, frequent purchases that is incompatible with a standard monthly electricity billing cycle.

Suggested Citation

  • B. Kelsey Jack & Grant Smith, 2015. "Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa," American Economic Review, American Economic Association, vol. 105(5), pages 237-241, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:237-41
    Note: DOI: 10.1257/aer.p20151096
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    More about this item

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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