Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa

B. Kelsey Jack and Grant Smith

American Economic Review, 2015, vol. 105, issue 5, 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.

JEL-codes: L94 L98 O13 Q48 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.p20151096
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