Hello. I am a Canadian licensed private pilot and might be able to provide some insight on this issue. As said previously, you have to shut off the transponder when you shut down electrics on the aircraft. However that is not the main reason.
A typical, what is referred to as "Mode C" transponder, doesn't have a simple 'on' or 'off' switch. It can have 'off' 'standby' 'on' 'alt' and 'test' positions. After engine start, you typically turn the transponder to 'stby' to let the unit 'warm up'. The xponder is then generally set to 'ALT' (for altitude reporting) during the pre-takeoff checklist or when taking the runway. This is the main reason for not having a transponder run all the time. At airports, especially busy ones, there can be a lot of traffic not only in the air but also on the ground. The screens of air traffic controllers can be crowed enough when they are full of aircraft spaced miles apart in the sky let alone just feet apart on the ground. When the xponder is set to 'off' or 'stby' the controller doesn't see a "tag" which displays information about the aircraft. Tags can fill up the controller's screen. An approach controller, for example, doesn't want nor need to know what 15 planes waiting for take-off are doing, he's only concerned with planes already in the air and doesn't want to be bombarded with information he doesn't need. That's why the xponder is set to report only when the aircraft is about to become airborne. Xponders are a bit more complex and there are other reasons and functions, but that's a main one.
Simply put, it is to help prevent overcrowding of a controller's scope.
Excellent question, hope that helps.
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