Event
PREPAYMENT, SALIENCE, AND PRICE ELASTICITY OF ELECTRICITY DEMAND IN A DEVELOPING COUNTRY CONTEXT
SEMINAR
30 May 2024
14:00 – 15:00 hrs (Singapore Time, GMT+8)
Prepayment, Salience, and Price Elasticity of Electricity Demand in a Developing Country Context
Dr Imelda
Thursday, 30 May 2024
14:00 – 15:00 hrs (Singapore Time, GMT+8)
National University of Singapore
Energy Studies Institute
Conference Room
29 Heng Mui Keng Terrace
Block A, #10-01, Singapore 119620
Abstract
The use of prepaid electricity meters requires customers to make payments prior to consumption as opposed to the conventional end-of-the-month bill. If prepayment enhances price salience, we would expect consumers to exhibit greater responsiveness to price changes compared to their postpaid counterparts. In this paper, we investigate the impact of prepaid electricity metering on consumer responsiveness to price changes compared to traditional postpaid systems in Indonesia, the country with the largest number of prepaid electricity users in the world (i.e., surpassing 40 million households). Using quasi-experimental tariff variations that are driven by the changes in national regulations, we present compelling evidence that prepaid meter users exhibit at least double the price elasticity compared to their postpaid counterparts. Our incentivized survey on individual willingness-to-pay to remain as a prepaid meter user indicates positive consumer welfare, underscoring increased consumer surplus from the use of prepayment systems. This suggests that salience-improving technologies, such as prepaid electricity meters, have the potential to advance climate policy goals by curbing carbon emissions through energy conservation.
About the Speaker
Imelda is the André Hoffmann Assistant Professor in Environmental and Resource Economics at the Geneva Graduate Institute (IHEID), Switzerland. She is also a research affiliate at the Centre for Economic and Policy Research (CEPR), an invited researcher at the Abdul Latif Jameel Poverty Action Lab (JPAL), and part of the Center for International Environmental Studies (CIES). She obtained her PhD in Economics at the University of Hawaii (USA) in 2018. Her research explores the intersections of health, energy, gender, and environmental economics, examining how the clean energy transition and policies can improve welfare and market outcomes. Her work is published in the Journal of Development Economics, the Economic Journal, and the American Economic Journal: Economic Policy. Her recent work, 'Clean Energy Access: Gender Disparity, Health, and Labour Supply,' won the 2023 International Geneva Award for its relevance to global policy and practice.