[drdeca]

Would "give poor people electricity credits (denominated in the currency) which can be redeemed by the electrical companies (and not anyone else) for actual money" be viable and help avoid the corrupt admins siphoning the money?

[radu_floricica]

It's the same as subsidizing electricity. Giving them cash allows for completely new and specific solutions, in a huge variety of forms. Better insulation. Switching to cheap heat pumps. Pooling cash together for a scaled-up approach - even if it's just family moving together. Not heating during the day. Accepting a lower temperature and using the funds for something else. Getting a credit for a more expensive fix.

Subsidizing electricity, directly or indirectly, is an incentive to do exactly nothing. Power is cheap, so you use it to heat the house - period. Any move to be more energy efficient doesn't make sense.

[drdeca]

Oh, I of course agree that in general (in the absence of reasons like corruption that would make this not work as well as it should) it is preferable to just give cash. I'm saying specifically as a means to route around corruption that would steal the cash if you attempted to simply give cash.

And, while it is a subsidy of one sort of electricity, it is, I think, not the same as other possible subsidies which simply try to keep the price down.

(terminology : when I say constant-across-people I mean that the number for each person at any given time is the same, but what this number is may change over time, and possibly frequently)

Specifically, instead of the state using a subsidy to pay for a constant-across-people fraction of all electricity costs, it would instead be paying, for each person, a constant-across-people additive amount of electricity costs.

I of course agree that this still distorts the market signals somewhat, but I think it is substantially less, and, in particular, avoids most of the issues of "being a place where electricity is super cheap, where people will therefore try things that require very large quantities of electricity", because, after the relatively small amount of electricity which is free-for-consumers, the price beyond that point is not artificially cheap (and may instead actually be a bit more expensive than would be natural, because of the artificial demand increase caused by the credits).

I'm not an economist, but I think that seems like it would be substantially less distortion-causing than the state paying a constant-across-people fraction of the price in order to keep the price-to-consumers below a given threshold.

[radu_floricica]

TBH, I don't particularly get how it would be stolen through corruption. I mean cash payments are pretty straightforward - either you get it or you don't, and people are pretty incentivized to make sure they get the money. It'd be the same as stealing pensions or children allocations.

You have an algorithm which says who gets energy allocations - and it really doesn't matter if it's approximate, as long as you notify who gets the money. Then you sent the money, and people will make a lot of noise if they don't get it. Sure, the algorithm won't be perfect, but people have a clear way of giving feedback: "I'm not getting money and should", or "I'm not included and think I should be because I'm poor". Just two failure modes, both clear.

Compare this to the totally opaque way energy subsidies work. Government postulates that prices should stay the same, then talks behind closed doors with a handful of companies and gives them a completely non-transparent amount of money that may or may not have anything to do with the price difference. I can probably think of 6 ways in 6 minutes on how this can be exploited.