Breaking the cycle: reducing non-payment for electricity-experimental evidence from Pakistan – IGC
The proposed research tests the effectiveness of behavioral interventions in fostering regular bill payment through a randomised field experiment (RCT) to be conducted in Pakistan. The experimental design was defined in partnership with K-Electric (henceforth, KE), a private, vertically integrated electric-energy corporation serving around 23 million residential, industrial and commercial customers in Karachi. In spite of the company’s efforts to reduce losses from non-payment of bills, through initiatives that strengthened enforcement and made payment easier, recovery rates still range between 70 and 90%. Our proposed interventions will make use of the tools commonly used in tax evasion and energy efficiency studies, i.e. communication to customers in the form of letters, to deliver information on the selective loadshedding policy and to make explicit the link between individual repayment decision and neighborhood level quality of energy provision. These messages will provide new information to those customers who are not aware of the policy, or make the policy salient to those customers who already know about it. The RCT will involve 10,000 KE customers, randomly selected from medium, high and very high loss areas. We will investigate the impacts of each message type on the quality of repayment over 9 months and explore the individual and social dynamics behind the effects.