IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v81y2019icp273-286.html
   My bibliography  Save this article

Addressing self-disconnection among prepayment energy consumers: A behavioural approach

Author

Listed:
  • Rocha, Marta
  • Baddeley, Michelle
  • Pollitt, Michael
  • Weeks, Melvyn

Abstract

This paper explores links between self-control in decision-making and self-disconnection by households using energy prepayment meters. Self-disconnection happens when households exhaust all available credit in their meter and are left without a supply of energy because they have been unable to top up. This has serious consequences for the well-being of households and also increases firms' costs. We explore behavioural characteristics associated with self-disconnection and present saving plans to help households minimise self-disconnection. We show that, in our sample, stated self-disconnection is positively associated with lower levels of goal achievement. We also show that households which have already experienced self-disconnection are more likely to accept an energy savings plan. It is relevant and promising that these households tend to select saving plans most likely to minimise their likelihood of self-disconnection. Our findings give some useful insights for energy policy-making, both for policy-makers interested in alleviating energy poverty and for energy utilities keen to limit self-disconnection.

Suggested Citation

  • Rocha, Marta & Baddeley, Michelle & Pollitt, Michael & Weeks, Melvyn, 2019. "Addressing self-disconnection among prepayment energy consumers: A behavioural approach," Energy Economics, Elsevier, vol. 81(C), pages 273-286.
  • Handle: RePEc:eee:eneeco:v:81:y:2019:i:c:p:273-286
    DOI: 10.1016/j.eneco.2019.03.025
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988319301045
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.eneco.2019.03.025?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 164-187, February.
    2. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    3. Stefano DellaVigna & Ulrike Malmendier, 2004. "Contract Design and Self-Control: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 353-402.
    4. R. H. Strotz, 1955. "Myopia and Inconsistency in Dynamic Utility Maximization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(3), pages 165-180.
    5. Dean Karlan & Sendhil Mullainathan & Margaret McConnell & Jonathan Zinman, 2010. "Getting to theTop of Mind: How Reminders Increase Saving," Working Papers id:2587, eSocialSciences.
    6. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    7. Ted O'Donoghue & Matthew Rabin, 2001. "Choice and Procrastination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 121-160.
    8. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    9. Harding, Matthew & Hsiaw, Alice, 2014. "Goal setting and energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 209-227.
    10. O'Sullivan, Kimberley C. & Stanley, James & Fougere, Geoffrey & Howden-Chapman, Philippa, 2016. "Heating practices and self-disconnection among electricity prepayment meter consumers in New Zealand: A follow-up survey," Utilities Policy, Elsevier, vol. 41(C), pages 139-147.
    11. 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.
    12. O'Sullivan, Kimberley C. & Howden-Chapman, Philippa L. & Fougere, Geoff, 2011. "Making the connection: The relationship between fuel poverty, electricity disconnection, and prepayment metering," Energy Policy, Elsevier, vol. 39(2), pages 733-741, February.
    13. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D. With contributions by-Name:Adamowicz,Wiktor, 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, November.
    14. Hsiaw, Alice, 2013. "Goal-setting and self-control," Journal of Economic Theory, Elsevier, vol. 148(2), pages 601-626.
    15. O'Sullivan, Kimberley C. & Howden-Chapman, Philippa L. & Fougere, Geoffrey M. & Hales, Simon & Stanley, James, 2013. "Empowered? Examining self-disconnection in a postal survey of electricity prepayment meter consumers in New Zealand," Energy Policy, Elsevier, vol. 52(C), pages 277-287.
    16. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053, November.
    17. Nava Ashraf & Dean Karlan & Wesley Yin, 2006. "Tying Odysseus to the Mast: Evidence From a Commitment Savings Product in the Philippines," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(2), pages 635-672.
    18. Philipp-Bastian Brutscher, 2012. "Self-disconnection among pre-payment customers: a behavioural analysis," Working Papers EPRG 1207, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    19. Brutscher, P., 2012. "Self-Disconnection Among Pre-Payment Customers - A Behavioural Analysis," Cambridge Working Papers in Economics 1214, Faculty of Economics, University of Cambridge.
    20. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, November.
    21. Dean Karlan & Margaret McConnell & Sendhil Mullainathan & Jonathan Zinman, 2016. "Getting to the Top of Mind: How Reminders Increase Saving," Management Science, INFORMS, vol. 62(12), pages 3393-3411, December.
    22. John Hills, 2012. "Final report of the Hills Independent Fuel Poverty Review: Getting the Measure of Fuel Poverty," CASE Reports casereport72, Centre for Analysis of Social Exclusion, LSE.
    23. Mathias Dewatripont & Isabelle Brocas & Juan Carrillo, 2004. "Commitment devices under self-control problems: an overview," ULB Institutional Repository 2013/9665, ULB -- Universite Libre de Bruxelles.
    24. Moore, Richard, 2012. "Definitions of fuel poverty: Implications for policy," Energy Policy, Elsevier, vol. 49(C), pages 19-26.
    25. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    26. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
    27. Hunt Allcott & Todd Rogers, 2014. "The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation," American Economic Review, American Economic Association, vol. 104(10), pages 3003-3037, October.
    28. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Burlinson, Andrew & Giulietti, Monica & Law, Cherry & Liu, Hui-Hsuan, 2021. "Fuel poverty and financial distress," Energy Economics, Elsevier, vol. 102(C).
    3. Oseni, Musiliu O., 2015. "Assessing the consumers’ willingness to adopt a prepayment metering system in Nigeria," Energy Policy, Elsevier, vol. 86(C), pages 154-165.
    4. Werthschulte, Madeline, 2023. "Present focus and billing systems: Testing ‘pay-as-you-go’ vs. ‘pay-later’," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 108-121.
    5. Bergmann, Ariel & Burton, Bruce & Klaes, Matthias, 2021. "European perceptions on crowdfunding for renewables: Positivity and pragmatism," Ecological Economics, Elsevier, vol. 179(C).

    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. Laureti, Carolina & Szafarz, Ariane, 2023. "Banking regulation and costless commitment contracts for time-inconsistent agents," Economic Modelling, Elsevier, vol. 129(C).
    2. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    3. Xavier Giné & Dean Karlan & Jonathan Zinman, 2010. "Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 213-235, October.
    4. Anett John (née Hofmann), 2014. "When Commitment Fails - Evidence from a Regular Saver Product in the Philippines," STICERD - Economic Organisation and Public Policy Discussion Papers Series 055, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. Marco Casari, 2009. "Pre-commitment and flexibility in a time decision experiment," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 117-141, April.
    6. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    7. Anett John (née Hofmann), 2014. "When Commitment Fails - Evidence from a Regular Saver Product in the Philippines," STICERD - Economic Organisation and Public Policy Discussion Papers Series 55, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    8. Anton Suvorov & Jeroen van de Ven, 2008. "Goal Setting as a Self-Regulation Mechanism," Working Papers w0122, Center for Economic and Financial Research (CEFIR).
    9. Burger, Nicholas & Charness, Gary & Lynham, John, 2011. "Field and online experiments on self-control," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 393-404, March.
    10. Wilfred Amaldoss & Mushegh Harutyunyan, 2023. "Pricing of Vice Goods for Goal-Driven Consumers," Management Science, INFORMS, vol. 69(8), pages 4541-4557, August.
    11. Muller, Paul & Habla, Wolfgang, 2018. "Experimental and non-experimental evidence on limited attention and present bias at the gym," Working Papers in Economics 743, University of Gothenburg, Department of Economics.
    12. Bisin, Alberto & Hyndman, Kyle, 2020. "Present-bias, procrastination and deadlines in a field experiment," Games and Economic Behavior, Elsevier, vol. 119(C), pages 339-357.
    13. Anett John, 2020. "When Commitment Fails: Evidence from a Field Experiment," Management Science, INFORMS, vol. 66(2), pages 503-529, February.
    14. Zachary Breig & Matthew Gibson & Jeffrey Shrader, 2019. "Why Do We Procrastinate? Present Bias and Optimism," Department of Economics Working Papers 2019-15, Department of Economics, Williams College.
    15. Koch, Alexander K. & Nafziger, Julia, 2020. "Motivational goal bracketing: An experiment," Journal of Economic Theory, Elsevier, vol. 185(C).
    16. Maria Alessandra Antonelli & Valeria De Bonis & Angelo Castaldo & Alessandrao Gandolfo, 2022. "Sin goods taxation: an encompassing model," Public Finance Research Papers 52, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    17. Altınok, Ahmet & Yılmaz, Murat, 2018. "Dynamic voluntary contribution to a public project under time inconsistency," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 114-140.
    18. Drew Fudenberg, 2006. "Advancing Beyond Advances in Behavioral Economics," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 694-711, September.
    19. Fernández-Val, Iván, 2009. "Fixed effects estimation of structural parameters and marginal effects in panel probit models," Journal of Econometrics, Elsevier, vol. 150(1), pages 71-85, May.
    20. Feigenbaum, James & Raei, Sepideh, 2023. "Lifecycle consumption and welfare with nonexponential discounting in continuous time," Journal of Mathematical Economics, Elsevier, vol. 107(C).

    More about this item

    Keywords

    Prepayment meters; Household finance; Goal achievement; Self-disconnection;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

    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:eee:eneeco:v:81:y:2019:i:c:p:273-286. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    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.