Eliciting trade-offs between water charges and service benefits in Scotland. ESRI Working Paper No. 655 March 2020

If it is the responsibility of a regulatory body to decide where to prioritise future investment, then it is important to understand the priorities of the citizenry it represents. This paper, in collaboration with the OECD and the Scottish water industry, presents the results of an online (n= 500) and face-to-face laboratory (n= 99) study that utilised experimental behavioural science to explore how Scottish citizens trade-off costs and potential improvements to their water service. Participants’ priorities for investment were elicited using a novel ‘slider task’ methodology that forced them to explicitly consider the trade-offs required to allocate limited resources across multiple possible water service improvements. The provision of additional cost and timing information was systematically varied. Results suggest that citizens are increasingly accepting of price rises when provided this information. Results also suggest that citizens’ priorities for specific improvements are not sensitive to the costs of different improvements but are sensitive to the lengths of time improvements take to be made. Findings from this study are designed to inform the regulatory process of the Scottish water industry and highlight the potential role of behavioural science in regulation more generally

An experimental study of attitudes to changing water charges in Scotland. ESRI Working Paper No.654 March 2020

If an aim of a regulatory body is to act on behalf of the views of its citizenry, then it is important to understand what those views are. This paper, in collaboration with the OECD and the Scottish water industry, presents the results of an online (n= 500) and face-to-face laboratory (n= 100) study that utilised experimental behavioural science to explore how the provision and presentation of future price change information influences Scottish citizens’ acceptance of water price changes. Participants were asked to rate different patterns of price rises for their water charges. The pattern, presentation, magnitude of price rises and the provision of additional cost information (designed to simplify the calculations of future costs) was manipulated across tasks and participants. Results from this study suggest that Scottish citizens are generally accepting of price rises in the short and medium terms. However, the patterns of price rises, and the way in which information is presented, can influence these attitudes, suggesting that consumers do not always accurately integrate sequential price rises over time. Findings from this study are designed to inform the regulatory process of the Scottish water industry and highlight the potential role of behavioural science in regulation more generally