Dynamic Salience with Intermittent Billing: Evidence from Smart Electricity Meters

34 Pages Posted: 5 Oct 2013 Last revised: 24 Apr 2021

See all articles by Ben Gilbert

Ben Gilbert

Colorado School of Mines - Division of Economics and Business

Joshua Graff Zivin

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS); National Bureau of Economic Research (NBER)

Date Written: October 2013

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

Gilbert, Ben and Graff Zivin, Joshua, Dynamic Salience with Intermittent Billing: Evidence from Smart Electricity Meters (October 2013). NBER Working Paper No. w19510, Available at SSRN: https://ssrn.com/abstract=2336375

Ben Gilbert (Contact Author)

Colorado School of Mines - Division of Economics and Business ( email )

1500 Illinois Street
Golden, CO 80401
United States

Joshua Graff Zivin

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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