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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.

Suggested Citation

  • Ben Gilbert & Joshua S. Graff Zivin, 2013. "Dynamic Salience with Intermittent Billing: Evidence from Smart Electricity Meters," NBER Working Papers 19510, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19510
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Michael K. Price, 2014. "Using field experiments to address environmental externalities and resource scarcity: major lessons learned and new directions for future research," Oxford Review of Economic Policy, Oxford University Press, vol. 30(4), pages 621-638.
    2. Wichman, Casey J., 2016. "Incentives, green preferences, and private provision of impure public goods," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 208-220.
    3. Keith M. Marzilli Ericson, 2014. "On the Interaction of Memory and Procrastination: Implications for Reminders," NBER Working Papers 20381, National Bureau of Economic Research, Inc.
    4. Asensio, Omar Isaac & Delmas, Magali A., 2016. "The dynamics of behavior change: Evidence from energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 196-212.
    5. Cardella, Eric & Ewing, Brad & Williams, Ryan Blake, 2018. "Green is Good – The Impact of Information Nudges on the Adoption of Voluntary Green Power Plans," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266583, Southern Agricultural Economics Association.
    6. repec:zbw:rwipro:177816 is not listed on IDEAS
    7. repec:eee:joepsy:v:66:y:2018:i:c:p:45-63 is not listed on IDEAS
    8. Ben Gilbert & Joshua S. Graff Zivin, 2018. "Dynamic corrective taxes with time-varying salience," Working Papers 2018-05, Colorado School of Mines, Division of Economics and Business.
    9. Trier Damgaard, Mette & Gravert, Christina, 2016. "The hidden costs of nudging: Experimental evidence from reminders in fundraising," Working Papers in Economics 650, University of Gothenburg, Department of Economics.
    10. repec:eee:resene:v:53:y:2018:i:c:p:1-19 is not listed on IDEAS
    11. repec:aen:journl:ej38-6-pon is not listed on IDEAS
    12. Palmer, Karen & Walls, Margaret, 2015. "Does Information Provision Shrink the Energy Efficiency Gap? A Cross-City Comparison of Commercial Building Benchmarking and Disclosure Laws," Discussion Papers dp-15-12, Resources For the Future.
    13. Wichman, Casey J., 2017. "Information provision and consumer behavior: A natural experiment in billing frequency," Journal of Public Economics, Elsevier, vol. 152(C), pages 13-33.
    14. Jessoe, Katrina & Rapson, David & Smith, Jeremy B., 2014. "Towards understanding the role of price in residential electricity choices: Evidence from a natural experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 191-208.
    15. Cl'emence Alasseur & Ivar Ekeland & Romuald Elie & Nicol'as Hern'andez Santib'a~nez & Dylan Possamai, 2017. "An adverse selection approach to power pricing," Papers 1706.01934, arXiv.org, revised Jun 2018.
    16. repec:eee:pubeco:v:157:y:2018:i:c:p:15-26 is not listed on IDEAS
    17. Yu, Yihua & Guo, Jin, 2016. "Identifying electricity-saving potential in rural China: Empirical evidence from a household survey," Energy Policy, Elsevier, vol. 94(C), pages 1-9.
    18. 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, Department of Economics and Business Economics, Aarhus University.
    19. repec:gam:jeners:v:11:y:2018:i:4:p:770-:d:138506 is not listed on IDEAS

    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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