IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v87y2024ics0957178723002163.html
   My bibliography  Save this article

Household water bill perception in Brazil

Author

Listed:
  • Pérez-Urdiales, María
  • Libra, Jesse M.
  • Machado, Kleber B.
  • Serebrisky, Tomás
  • Sosa, Ben Solís

Abstract

An issue that affects the effectiveness of water pricing policies is consumer misperception, which implies that households decide their water consumption based on poor/inaccurate information about the marginal price. We use household survey data on bill and quality perception in Brazil to analyze this problem and its drivers. Once we control for the selection bias caused by survey respondents voluntarily providing their bill, we find evidence of Bill misperception. Apart from the informational and socioeconomic drivers usually considered in the literature, perceived water quality is a relevant factor in misperception.

Suggested Citation

  • Pérez-Urdiales, María & Libra, Jesse M. & Machado, Kleber B. & Serebrisky, Tomás & Sosa, Ben Solís, 2024. "Household water bill perception in Brazil," Utilities Policy, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:juipol:v:87:y:2024:i:c:s0957178723002163
    DOI: 10.1016/j.jup.2023.101704
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957178723002163
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jup.2023.101704?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Samuele Centorrino & María Pérez‐Urdiales & Boris Bravo‐Ureta & Alan Wall, 2024. "Binary endogenous treatment in stochastic frontier models with an application to soil conservation in El Salvador," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(3), pages 365-382, April.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    4. S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
    5. de Bartolome, Charles A. M., 1995. "Which tax rate do people use: Average or marginal?," Journal of Public Economics, Elsevier, vol. 56(1), pages 79-96, January.
    6. Centorrino, Samuele & Pérez-Urdiales, María, 2023. "Maximum likelihood estimation of stochastic frontier models with endogeneity," Journal of Econometrics, Elsevier, vol. 234(1), pages 82-105.
    7. Nur Syuhada, C.I. & Mahirah, K. & Roseliza, M.A., 2020. "Dealing with attributes in a discrete choice experiment on valuation of water services in East Peninsular Malaysia," Utilities Policy, Elsevier, vol. 64(C).
    8. Casey, James F. & Kahn, James R. & Rivas, Alexandre, 2006. "Willingness to pay for improved water service in Manaus, Amazonas, Brazil," Ecological Economics, Elsevier, vol. 58(2), pages 365-372, June.
    9. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    10. Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-563, February.
    11. R Quentin Grafton & Long Chu & Paul Wyrwoll, 2020. "The paradox of water pricing: dichotomies, dilemmas, and decisions," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(1), pages 86-107.
    12. Selma Karuaihe & Philip Wandschneider & Jonathan Yoder, 2012. "Water Bill Estimation When Price Is Cryptic: Experience From Windhoek, Namibia," South African Journal of Economics, Economic Society of South Africa, vol. 80(2), pages 264-286, June.
    13. Pérez-Urdiales, María & Baerenklau, Kenneth A., 2019. "Learning to live within your (water) budget: Evidence from allocation-based rates," Resource and Energy Economics, Elsevier, vol. 57(C), pages 205-221.
    14. Ramón Barberán & Julio López-Laborda & Fernando Rodrigo, 2022. "The Perception of Residential Water Tariff, Consumption, and Cost: Evidence of its Determinants Using Survey Data," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(9), pages 2933-2952, July.
    15. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2014. "Estimation of Residential Water Demand with Imperfect Price Perception," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(4), pages 561-581, December.
    16. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.
    17. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    18. Hasan, Syed M. & Akram, Agha Ali & Jeuland, Marc, 2021. "Awareness of coping costs and willingness to pay for urban drinking water service: Evidence from Lahore, Pakistan," Utilities Policy, Elsevier, vol. 71(C).
    19. María Pérez-Urdiales & María García-Valiñas & Roberto Martínez-Espiñeira, 2016. "Responses to Changes in Domestic Water Tariff Structures: A Latent Class Analysis on Household-Level Data from Granada, Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(1), pages 167-191, January.
    20. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
    21. Narzetti, Daniel Antonio & Marques, Rui Cunha, 2021. "Isomorphic mimicry and the effectiveness of water-sector reforms in Brazil," Utilities Policy, Elsevier, vol. 70(C).
    22. David Roodman, 2011. "Fitting fully observed recursive mixed-process models with cmp," Stata Journal, StataCorp LP, vol. 11(2), pages 159-206, June.
    23. Brent, Daniel A. & Ward, Michael B., 2019. "Price perceptions in water demand," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    24. María Á. García-Valiñas & Roberto Martínez-Espiñeira & Marta Suárez-Varela Maciá, 2021. "Price and Consumption Misperception Profiles: The Role of Information in the Residential Water Sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(4), pages 821-857, December.
    25. Bryan J. Hubbell & Jeffrey L. Jordan, 2000. "Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 427-437.
    26. Nicholas, William & Vedachalam, Sridhar, 2021. "Poor accessibility of water utilities’ consumer confidence reports," Utilities Policy, Elsevier, vol. 72(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. D'Amore, Gabriella & Landriani, Loris & Lepore, Luigi & Testa, Maria, 2024. "A multi-criteria model for measuring the sustainability orientation of Italian water utilities," Utilities Policy, Elsevier, vol. 89(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pérez, María & Libra, Jesse & Machado, Kleber & Serebrisky, Tomás & Solís, Ben, 2022. "Water Bill Perception in Brazil: Do Households Get It Right?," EconStor Preprints 264986, ZBW - Leibniz Information Centre for Economics.
    2. María Á. García-Valiñas & Roberto Martínez-Espiñeira & Marta Suárez-Varela Maciá, 2021. "Price and Consumption Misperception Profiles: The Role of Information in the Residential Water Sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(4), pages 821-857, December.
    3. María Ángeles García-Valiñas & Sara Suárez-Fernández, 2022. "Are Economic Tools Useful to Manage Residential Water Demand? A Review of Old Issues and Emerging Topics," Post-Print hal-04067487, HAL.
    4. Eunji Choi & Jonghoon Park & Seongwoo Lee, 2020. "The Effect of the Comprehensive Rural Village Development Program on Farm Income in South Korea," Sustainability, MDPI, vol. 12(17), pages 1-23, August.
    5. Villarreal, Francisco G., 2014. "Financial Services and Household Inequality in Mexico," MPRA Paper 57075, University Library of Munich, Germany.
    6. Arndt Reichert & Harald Tauchmann, 2014. "When outcome heterogeneously matters for selection: a generalized selection correction estimator," Applied Economics, Taylor & Francis Journals, vol. 46(7), pages 762-768, March.
    7. Rama Lionel Ngenzebuke, 2016. "Female say on income and child outcomes: Evidence from Nigeria," WIDER Working Paper Series 134, World Institute for Development Economic Research (UNU-WIDER).
    8. Takashi Yamagata & Chris Orme, 2005. "On Testing Sample Selection Bias Under the Multicollinearity Problem," Econometric Reviews, Taylor & Francis Journals, vol. 24(4), pages 467-481.
    9. Ramón Barberán & Julio López-Laborda & Fernando Rodrigo, 2022. "The Perception of Residential Water Tariff, Consumption, and Cost: Evidence of its Determinants Using Survey Data," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(9), pages 2933-2952, July.
    10. Kussel, Gerhard & Frondel, Manuel, 2016. "Switching Response to Power Prices: Evidence from German Households," VfS Annual Conference 2016 (Augsburg): Demographic Change 145728, Verein für Socialpolitik / German Economic Association.
    11. Rahman, Mustafizur & Al-Hasan, Md., 2018. "Male-Female wage gap and informal employment in Bangladesh: A quantile regression approach," MPRA Paper 90131, University Library of Munich, Germany.
    12. Sara Wong, 2017. "Minimum wage impacts on wages and hours worked of low-income workers in Ecuador," Working Papers PMMA 2017-14, PEP-PMMA.
    13. Luis E. Villegas & Andrés A. Acuña-Duarte & César A. Salazar, 2023. "Corporate Social Responsibility and the Willingness to Eco-Innovate among Chilean Firms," Sustainability, MDPI, vol. 15(12), pages 1-19, June.
    14. Mertzanis, Charilaos & Garas, Samy & Abdel-Maksoud, Ahmed, 2020. "Integrity of financial information and firms' access to energy in developing countries," Energy Economics, Elsevier, vol. 92(C).
    15. Jochmans, Koen, 2015. "Multiplicative-error models with sample selection," Journal of Econometrics, Elsevier, vol. 184(2), pages 315-327.
    16. Chiang, Eric P. & Assane, Djeto, 2008. "Music piracy among students on the university campus: Do males and females react differently?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1371-1380, August.
    17. Hamermesh, Daniel S. & Donald, Stephen G., 2008. "The effect of college curriculum on earnings: An affinity identifier for non-ignorable non-response bias," Journal of Econometrics, Elsevier, vol. 144(2), pages 479-491, June.
    18. Peter Hull & Michal Kolesár & Christopher Walters, 2022. "Labor by design: contributions of David Card, Joshua Angrist, and Guido Imbens," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(3), pages 603-645, July.
    19. Glenn W. Harrison & Morten I. Lau & Hong Il Yoo, 2020. "Risk Attitudes, Sample Selection, and Attrition in a Longitudinal Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 102(3), pages 552-568, July.
    20. Roberto Balado-Naves & Sara Suarez-Fernandez, 2023. "Residential water demand: Gender differences in water consumption," Efficiency Series Papers 2023/06, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).

    More about this item

    Keywords

    Water pricing; Water quality; Price perceptions; Economics of information;
    All these keywords.

    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:87:y:2024:i:c:s0957178723002163. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.sciencedirect.com/journal/utilities-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.