Assessing the comprehension of the Maltese utility bill : a behavioural economics approach

Abstract

With skyrocketing energy prices and demand for water which is exceeding sustainable levels, utility bills have become a crucial medium of feedback and communication between providers and customers, with literature showing evidence that utility bill feedback can decrease energy use. Nevertheless, utility bills are often found to be difficult to understand. Thus, this research sets out to measure the comprehension of utility bills in Malta. The study runs a randomised behavioural economics experiment where subjects are each presented a different utility bill and subjects are then asked fourteen questions, each carrying a mark if the correct answer is picked. There is a total of four utility bills; one control utility bill and three treatment bills, all presented equally and randomly between subjects. The working sample is that of 368. The study tests if comprehension improves with visual representation, if comprehension improves with less detail, if comprehension improves with visuals and less detail, and if familiarity with utility bills improves with experience, education, and income. Means analysis finds no evidence that treatments have a significant effect on utility comprehension. However, Ordinary Least Squares (OLS) regression analysis finds that when covariates are added, treatment number three is significantly and positively affecting utility bill comprehension. The research also finds some support for Hypothesis four – namely that age, age squared, household care, and education are significant determinants of familiarity will utility bills. Econometric analysis is carried out using OLS and ordinal logistic models, with the latter confirming the validity of ordinal OLS. Being the first study of its kind in Malta, this research offers a useful contribution to literature and future utility bill design, suggesting the importance of featuring more infographics and visuals, and less information.