Paying for Urban Services: Utility Bills and the Spending Patterns of the Poor

Revenue recovery is a challenge for urban service providers in developing countries. Poor customers often struggle to pay monthly bills and providers face both high costs and political economy barriers to enforcing payment. Prepayment is an increasingly popular solution to this problem in the electricity and water sectors. In this study setting, low income households purchase prepaid electricity every 3 days, on average, and use 12 percent less electricity than when they are billed monthly. Researchers will investigate the preferences and constraints that give rise to these spending and consumption patterns on prepaid metering. The study findings will both shed light on factors that contribute to current high rates of payment delinquency on monthly billing and will inform the design of interventions to improve revenue recovery for urban services while simultaneously meeting the needs of low income households.