Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa
American Economic Review
vol. 105,
no. 5, May 2015
(pp. 237-41)
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.Citation
Jack, B. Kelsey, and Grant Smith. 2015. "Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa." American Economic Review, 105 (5): 237-41. DOI: 10.1257/aer.p20151096Additional Materials
JEL Classification
- L94 Electric Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q48 Energy: Government Policy