Information Provision and Consumer Behavior: A Natural Experiment in Billing Frequency

Casey Wichman

RFF Working Paper Series from Resources for the Future

Abstract: In this study, I examine a causal effect of billing frequency on consumer behavior. I exploit a natural experiment in which residential water customers transitioned exogenously from bi-monthly to monthly billing. I find that customers increase consumption by approximately 5 percent in response to more frequent information. This result is reconciled in a model of price uncertainty, where increases in billing frequency reduce the distortion in consumers' perception of price. Using treatment effects as suffcient statistics, I calculate gains in consumer surplus equivalent to 0.5-1 percent of annual water expenditures. Heterogeneous treatment effects suggest increases in outdoor water use.

Keywords: information provision; billing frequency; price perception; natural experiment; water demand; water conservation; welfare (search for similar items in EconPapers)
JEL-codes: D12 D61 H42 L95 Q21 Q25 (search for similar items in EconPapers)
Date: 2015-07-24
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Information provision and consumer behavior: A natural experiment in billing frequency (2017)
Working Paper: Information Provision and Consumer Behavior: A Natural Experiment in Billing Frequency (2016)
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