The Incidence of Extreme Economic Stress: Evidence from Utility Disconnections

Steve Cicala

No 28422, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses monthly zip code-level data on electricity disconnections to document the socioeconomic correlates of extreme economic distress among 5 million customers in Illinois. In 2018-2019, customers in Black and Hispanic zip codes were about 4 times more likely to be disconnected for non-payment, 2-3 times more likely to be on deferred payment plans, and 70% more likely to participate in utility-based low-income assistance programs, controlling for zip code distributions of income and other demographic characteristics. During the COVID-19 pandemic, there has been a nine-fold expansion in low-income assistance to pay utility bills, but disconnections were double and deferred payment plans triple their historical averages in October 2020. Disconnection notices were served to 2.5% of commercial and industrial accounts, and 3.4% of residential accounts each month in late 2020. About 20% of all accounts were charged late fees. The odds for each of these measures were multiples higher in minority and low-income zip codes.

JEL-codes: G51 I30 L94 Q40 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ene
Note: EEE PE
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Published as Cicala, Steve, 2021. "The incidence of extreme economic stress: Evidence from utility disconnections," Journal of Public Economics, Elsevier, vol. 200(C).
Published as Steve Cicala, 2021. "The incidence of extreme economic stress: Evidence from utility disconnections," Journal of Public Economics, vol 200.

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