Household water bill perception in Brazil

Abstract

An issue that affects the effectiveness of water pricing policies is consumer misperception, which implies that households decide their water consumption based on poor/inaccurate information about the marginal price. We use household survey data on bill and quality perception in Brazil to analyze this problem and its drivers. Once we control for the selection bias caused by survey respondents voluntarily providing their bill, we find evidence of Bill misperception. Apart from the informational and socioeconomic drivers usually considered in the literature, perceived water quality is a relevant factor in misperception.