Responsiveness of low-income households to hybrid price/non-price policies in the presence of energy shortages: evidence from Colombia

At the beginning of 2016, Colombia was experiencing an energy shortage, and in order to avoid mandatory power cuts, the government launched an unexpected hybrid price/non-price energy-saving policy. In this paper, I evaluate how low-income households in a major Colombian city respond to this policy. Using hourly household electricity consumption data, I find that, on average, households reduce electricity consumption by 4.5% as a result of the policy. It is striking that even low-income households, who consume relatively small amounts of electricity, respond to energy-saving policies and engage in conservation behaviors in the short term. In my analysis, I also find that the effect is stronger the higher the household pre-treatment electricity consumption levels and smaller among poorer households. However, the heterogeneity in terms of income level vanishes once I control for household pre-program electricity consumption levels. Finally, my point estimates are comparable to the impact estimates of policies that are similar to the one I analyze in this paper.