An Experimental Study of Monthly Electricity Demand (In)Elasticity
36 Pages Posted: 3 May 2018 Last revised: 27 May 2018
Date Written: May 21, 2018
We partnered with an electricity retailer to run a field experiment in which randomly-selected households received discounts of up to 50% on their total electricity bill or up to 95% off their per unit cost of electricity. Over two months, we find that the quantity of electricity consumed by treatment households remained unchanged despite these discounts. Exploiting rich billing, smart meter, and survey data, we reject comparable price elasticity estimates from the literature, even among subgroups who were most likely to respond. Our results reveal substantial rigidity in household electricity demand in response to large transitory price shocks.
Keywords: Price Elasticity, Energy Demand, Field Experiment
JEL Classification: C93, L94, Q41
Suggested Citation: Suggested Citation