Working Paper: NBER ID: w28422
Authors: Steve Cicala
Abstract: This paper uses monthly zip code-level data on electricity disconnections to document the socioeconomic correlates of extreme economic distress among 5 million customers in Illinois. In 2018-2019, customers in Black and Hispanic zip codes were about 4 times more likely to be disconnected for non-payment, 2-3 times more likely to be on deferred payment plans, and 70% more likely to participate in utility-based low-income assistance programs, controlling for zip code distributions of income and other demographic characteristics. During the COVID-19 pandemic, there has been a nine-fold expansion in low-income assistance to pay utility bills, but disconnections were double and deferred payment plans triple their historical averages in October 2020. Disconnection notices were served to 2.5% of commercial and industrial accounts, and 3.4% of residential accounts each month in late 2020. About 20% of all accounts were charged late fees. The odds for each of these measures were multiples higher in minority and low-income zip codes.
Keywords: No keywords provided
JEL Codes: G51; I30; L94; Q40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Race (J15) | Utility disconnections (L97) |
| Socioeconomic status (I24) | Deferred payment plans (G51) |
| Socioeconomic status (I24) | Low-income assistance programs (I38) |
| Low-income assistance (I32) | Buffering economic stress (F65) |