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Correcting for Truncation Bias in the Analysis of Experiments in Time-of-Day Pricing of Electricity

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Listed:
  • Dennis J. Aigner
  • Jerry A. Hausman

Abstract

This paper applies methods for analyzing data from samples that have been chosen by restricting the target population in discernible ways to date from a 1976 experiment in time-of-day pricing of electricity for residential customers in Arizona. We find that whereas conventional estimation methods lead to the conclusion that the peak price elasticity of demand is larger (in absolute value) than either the corresponding midpeak or offpeak elasticity, once truncation bias is accounted for, the peak elasticity is smaller than the other two. This finding accords with a preliminary analysis of data from Wisconsin, where no such sample truncation was present.

Suggested Citation

  • Dennis J. Aigner & Jerry A. Hausman, 1980. "Correcting for Truncation Bias in the Analysis of Experiments in Time-of-Day Pricing of Electricity," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 131-142, Spring.
    • Handle: RePEc:rje:bellje:v:11:y:1980:i:spring:p:131-142
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    Cited by:

    1. Woo, C.K. & Liu, Y. & Zarnikau, J. & Shiu, A. & Luo, X. & Kahrl, F., 2018. "Price elasticities of retail energy demands in the United States: New evidence from a panel of monthly data for 2001–2016," Applied Energy, Elsevier, vol. 222(C), pages 460-474.
    2. Simona Bigerna and Carlo Andrea Bollino, 2014. "Electricity Demand in Wholesale Italian Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    3. Woo, C.K. & Shiu, A. & Liu, Y. & Luo, X. & Zarnikau, J., 2018. "Consumption effects of an electricity decarbonization policy: Hong Kong," Energy, Elsevier, vol. 144(C), pages 887-902.
    4. Richard A. Berk & Robert F. Boruch & David L. Chambers & Peter H. Rossi & Ann D. Witte, 1985. "Social Policy Experimentation," Evaluation Review, , vol. 9(4), pages 387-429, August.
    5. Harding, Matthew & Lamarche, Carlos, 2019. "A panel quantile approach to attrition bias in Big Data: Evidence from a randomized experiment," Journal of Econometrics, Elsevier, vol. 211(1), pages 61-82.
    6. A. Gürhan Kök & Kevin Shang & Şafak Yücel, 2018. "Impact of Electricity Pricing Policies on Renewable Energy Investments and Carbon Emissions," Management Science, INFORMS, vol. 64(1), pages 131-148, January.
    7. Joskow, Paul L., 2019. "Jerry Hausman," Journal of Econometrics, Elsevier, vol. 211(1), pages 11-15.
    8. Herter, Karen & Wayland, Seth, 2010. "Residential response to critical-peak pricing of electricity: California evidence," Energy, Elsevier, vol. 35(4), pages 1561-1567.

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