The impact of socio-economic background on satisfaction: evidence for policy-makers

Abstract

Consumer satisfaction with utility services has received increased attention from firms, consumer associations, regulators and governments since the 1990s. Evidence is mounting that consumers in specific socio-economic groups express lower satisfaction levels than their peers, at least, in some utility markets. Seeing this as part of their remit to protect consumer welfare, governments and international organizations are exploring possible demand-side policy responses with the intention of ameliorating lower satisfaction levels of these groups of consumers. However, more information on the precise relationships between satisfaction and consumers' socio-economic background is required if policy is to be proportional and effective. This paper provides new empirical knowledge on this topic by contrasting consumers' stated and revealed preferences for five utility services (electricity, gas, fixed and cellular telephony and Internet) across twelve European countries. We find strong evidence that consumers' socio-economic characteristics matter: consumers with lower levels of education, the elderly and those not employed exhibit particular expenditure patterns on, and lower satisfaction levels with, some utility services. However, this relationship is uneven and depends on the socio-economic category and service in question. We conclude by highlighting five findings which may be of use to policy-makers when considering whether demand-side regulatory policies are required