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Can higher prices stimulate product use? Evidence from a field experiment in Zambia
- American Economic Review
, 2010
"... Nonprofit approaches to the distribution of health products in developing countries are often grouped into “social marketing ” and “public health ” categories, with the former emphasizing retail sales and the latter emphasizing free distribution through health clinics. Advocates of the public health ..."
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Cited by 86 (4 self)
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Nonprofit approaches to the distribution of health products in developing countries are often grouped into “social marketing ” and “public health ” categories, with the former emphasizing retail sales and the latter emphasizing free distribution through health clinics. Advocates of the public health approach often object to the use of prices to mediate distribution. Critics of pricing argue that “charging people for basic health care...[is] unfair,”1 and that fees ensure that goods only reach “the richest of the poor.”2 Advocates of pricing counter that “when products are given away free, the recipient often does not value them or even use them.”.3 The latter argument is commonly interpreted to mean that higher prices cause greater prod-uct use through a sunk-cost effect (Richard Thaler 1980; Erik Eyster 2002). An equally plausible
The experimental approach to development economics
- Ann Rev Econ
"... Randomized experiments have become a popular tool in development economics research, and have been the subject of a number of criticisms. This paper reviews the recent literature, and discusses the strengths and limitations of this approach in theory and in practice. We argue that the main virtue of ..."
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Cited by 47 (1 self)
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Randomized experiments have become a popular tool in development economics research, and have been the subject of a number of criticisms. This paper reviews the recent literature, and discusses the strengths and limitations of this approach in theory and in practice. We argue that the main virtue of randomized experiments is that, due to the close collaboration between researchers and implementers, they allow the estimation of parameters that it would not otherwise be possible to evaluate. We discuss the concerns that have been raised regarding experiments, and generally conclude that while they are real, they are often not specific to experiments. We conclude by discussing the relationship between theory and experiments. The last few years have seen a veritable explosion of randomized experiments in development economics and with it, perhaps inevitably, a rising tide of criticism. Almost all of the criticism is well-meant, recognizing the benefits of such experiments while suggesting that we not forget that there are a lot of important questions that randomized experiments cannot answer. Much of it is also not new. Indeed, most of the standard objections (and some not so standard ones)
Health Behavior in Developing Countries.”
- Annual Review of Economics.,
, 2011
"... Abstract The disease burden in low-income countries is extremely high. Malaria, respiratory infections, diarrhea, AIDS, and other diseases are estimated to kill more than 15 million people each year, most of them children. Yet the great majority of these diseases can be prevented or treated. This a ..."
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Cited by 25 (2 self)
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Abstract The disease burden in low-income countries is extremely high. Malaria, respiratory infections, diarrhea, AIDS, and other diseases are estimated to kill more than 15 million people each year, most of them children. Yet the great majority of these diseases can be prevented or treated. This article reviews microeconomic studies of health-seeking behavior in low-income countries. Factors examined include information, peers, liquidity constraints, and nonrational preferences, such as present bias. I then discuss the implications for policy, including the scope for mandates, subsidies, and incentives.
Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial ∗
, 2011
"... In response to widespread resistance to older anti-malarials, the global health community is planning to make new, more effective malaria treatments called Artemisinin Combination Therapies (ACTs) available at heavily subsidized rates throughout Africa. Highly-subsidized ACTs accessed through the pr ..."
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Cited by 24 (6 self)
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In response to widespread resistance to older anti-malarials, the global health community is planning to make new, more effective malaria treatments called Artemisinin Combination Therapies (ACTs) available at heavily subsidized rates throughout Africa. Highly-subsidized ACTs accessed through the private sector may go a long way toward reducing malaria-induced mortality and morbidity. However, lower-priced ACTs are also likely to increase inappropriate treatment, wasting subsidy dollars and potentially contributing to drug resistance. This paper uses data from a randomized controlled trial conducted with over 2,700 households in rural Kenya to study the tradeoffs between ACT affordability and overuse. We compare the proposed ACT subsidy policy to an alternative policy regime that explicitly acknowledges the problem of overuse by providing access to a subsidized rapid diagnostic test for malaria (RDT) in tandem with subsidized ACTs. We find that ACT access increases by 59 percent in the presence of an ACT subsidy of 80 percent of more. Under the proposed ACT subsidy policy, however, only 56 percent of those buying an ACT at the drug shop test positive for malaria. We show that this share increases (without substantially compromising access) to 81 percent when the ACT subsidy is somewhat reduced and accompanied by an RDT subsidy. We thank the Clinton Health Access Initiative and Novartis Pharmaceuticals for financial support. We
forthcoming). "What matters (and what does not) in households’ decision to invest in malaria prevention?" American Economic Review Papers and Proceedings
"... This paper examines the take-up of a new malaria-control device by rural households in Kenya and tests whether the demand curve for the device varies with the framing of marketing messages and with the gender of the person targeted by the marketing. Previous research suggests that the demand for mal ..."
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Cited by 17 (5 self)
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This paper examines the take-up of a new malaria-control device by rural households in Kenya and tests whether the demand curve for the device varies with the framing of marketing messages and with the gender of the person targeted by the marketing. Previous research suggests that the demand for malaria prevention is highly price-sensitive (Jessica Cohen and Pascaline Dupas, 2008), even though the private returns to preventing malaria are very large (Christian Lengeler, 2004). In the standard model of investment in human capital, individuals invest in a health product if the expected benefits from the product outweigh its costs (Michael Grossman, 1972). In this framework, the low take-up observed at relatively moderate prices by Cohen and Dupas (2008) could be due to people underestimating the expected benefits of investing in prevention; or due to people being credit-constrained and unable to pay the cost upfront. It is also possible that the standard model does not apply, because people have time-inconsistent preferences or because they are uncertain about their own preferences and rely on external cues to resolve their own uncertainty when a decision needs to be made. An extensive literature in psychology and marketing suggests that decision-making can be affected by frames or cues that do not add information about a product but can be effective at persuading individuals to invest in it. For example, in a recent field experiment in South Africa,
Information and subsidies: Complements or substitutes
- Journal of Economic Behavior & Organization
, 2013
"... a b s t r a c t Does providing information about a product influence the impact of price subsidies on purchases? This question is particularly relevant for health products in developing countries where both informational campaigns and price subsidies are common policy instruments. We conduct a fiel ..."
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Cited by 11 (3 self)
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a b s t r a c t Does providing information about a product influence the impact of price subsidies on purchases? This question is particularly relevant for health products in developing countries where both informational campaigns and price subsidies are common policy instruments. We conduct a field experiment in Zambia and find that providing information about a new version of a product significantly increases the impact of price subsidies on take-up. Taken alone, the information manipulation has no significant impact on demand while the price subsidy substantially increases demand. However, the evaluation of either intervention in isolation fails to capture the significant complementarity between the two.
Income Inequality and Early Non-Marital Childbearing: An Economic Exploration of the "Culture of Despair"." National Bureau of Economic Research Working Paper Series
, 2011
"... ABSTRACT Using individual-level data from the United States and a number of other developed countries, we empirically investigate the role of income inequality in determining rates of early, nonmarital childbearing among low socioeconomic status (SES) women. We present robust evidence that low SES ..."
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Cited by 11 (4 self)
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ABSTRACT Using individual-level data from the United States and a number of other developed countries, we empirically investigate the role of income inequality in determining rates of early, nonmarital childbearing among low socioeconomic status (SES) women. We present robust evidence that low SES women are more likely to give birth at a young age and outside of marriage when they live in more unequal places, all else held constant. Our results suggest that inequality itself, as opposed to other correlated geographic factors, drives this relationship. We calculate that differences in the level of inequality are able to explain a sizeable share of the geographic variation in teen fertility rates both across U.S. states and across developed countries. We propose a model of economic "despair" that facilitates the interpretation of our results. It reinterprets the sociological and ethnographic literature that emphasizes the role of economic marginalization and hopelessness into a parsimonious framework that captures the concept of "despair" with an individual's perception of economic success. Our empirical results are consistent with the idea that income inequality heightens a sense of economic despair among those at the bottom of the distribution.
Micro-loans, Insecticide-Treated Bednets and Malaria: Evidence from a randomized controlled trial in Orissa (India
, 2011
"... Many severe health risks in developing countries could be substantially reduced with access to appropri-ate preventive measures. However, the associated costs are often high enough to restrict access among poor households, and free provision through public health campaigns is often not financially f ..."
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Cited by 11 (0 self)
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Many severe health risks in developing countries could be substantially reduced with access to appropri-ate preventive measures. However, the associated costs are often high enough to restrict access among poor households, and free provision through public health campaigns is often not financially feasible. We describe findings from the first large-scale cluster randomized controlled trial in a developing country context that evaluates the uptake of a health-protecting technology, insecticide-treated bednets (ITNs), through micro-consumer loans, as compared to free distribution and control conditions. Numerous stud-ies have shown that widespread, regular use of ITNs is one the most effective preventive measures against malaria. However, ownership rates remain very low in most malarious areas, including our study areas in rural Orissa (India). Despite the un-subsidized price, 52 percent of sample households purchased at least one ITN, leading to 16 percent of individuals using a treated net the previous night, relative to only 2 percent in control areas where nets were not offered for sale. However, the increase fell significantly short of the 47 percent previous-night usage rate achieved with free distribution. Most strikingly, we find that neither micro-loans nor free distribution led to improvements in malaria and anemia prevalence, mea-sured using blood tests. We examine and rule out several plausible explanations for this latter finding. We conjecture that insufficient ITN coverage is the most likely explanation, and discuss implications for public health policy.
How large are non-budget-constraint effects of prices on demand
- American Economic Journal: Applied Economics
, 2009
"... www.wine-economics.org ..."
