Disbursing Emergency Relief Through Utilities: Evidence from Ghana

24 Pages Posted: 24 May 2021 Last revised: 30 Mar 2023

See all articles by Susanna B. Berkouwer

Susanna B. Berkouwer

University of Pennsylvania

Pierre Biscaye

University of Washington

Steven Puller

Texas A&M University - Department of Economics

Catherine Wolfram

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Date Written: May 2021

Abstract

Government transfer programs to distribute food, water, or electricity at low or no cost have been widespread during the COVID-19 global health crisis. How does program design affect the efficiency and distributional implications of these policies? And what design features determine their political popularity? We study these questions in the context of a program to distribute relief through the electric utility in Accra, Ghana, using data from 1,200 households surveyed during the COVID-19 crisis. We find that distributing relief through electricity transfers has significant advantages. It enables an immediate government response to the crisis because it leverages the existing financial infrastructure between the government utility and households. Moreover, theoretical efficiency concerns about in-kind transfers are mitigated because the transfers are inframarginal for most households and electricity credit can be stored, with many even preferring electricity transfers over cash. These advantages do not preclude delays in transfer receipt and the exclusion of some eligible households, and the program is regressive in both design and implementation. The households least likely to receive relief are those who use less electricity, pay a landlord or other intermediary for electricity, or share an electricity meter with other users – all common among low-income electricity consumers in urban settings. Finally, transfer receipt increases support for the governing party, but support for the program drops significantly if even a fraction of its costs are to be recovered through future electricity tariff increases. Concerns around disbursing relief through utility transfers in this context thus arise not from efficiency loss, but from regressivity, distributional challenges, and politicization.

Suggested Citation

Berkouwer, Susanna B. and Biscaye, Pierre and Puller, Steven and Wolfram, Catherine, Disbursing Emergency Relief Through Utilities: Evidence from Ghana (May 2021). NBER Working Paper No. w28818, Available at SSRN: https://ssrn.com/abstract=3851821

Susanna B. Berkouwer (Contact Author)

University of Pennsylvania

Pierre Biscaye

University of Washington

Seattle, WA 98195
United States

Steven Puller

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Catherine Wolfram

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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