Does quality of electricity matter? Household-level evidence from the Philippines

The Philippines faces many development challenges, including providing reliable and good-quality electricity. Access to a good-quality electricity connection matters because it affects productivity (e.g., education, health, business) and can make lives easier and more comfortable, yet many households still suffer from poor connection quality due to power outages, fluctuations, and low voltage. This article examines whether better electricity quality improves household welfare, applying a two-stage probit-ordered probit model to address endogeneity caused by reverse causation between electricity quality and household income. The authors find that households experiencing better electricity quality decrease the probability of remaining in the lowest income category by 23%.