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Economic and psychological effects of health insurance and cash transfers: Evidence from a randomized experiment in Kenya

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  • Haushofer, Johannes
  • Chemin, Matthieu
  • Jang, Chaning
  • Abraham, Justin

Abstract

We use a randomized experiment in Nairobi to compare the effect of free health insurance to an unconditional cash transfer of the same value and a control group. Despite high baseline rates of injury and illness, the median insurance taker does not use the insurance. We observe no significant effects of either insurance or cash on economic outcomes, self-reported health, and healthcare utilization. We find some evidence that the provision of health insurance reduced levels of self-reported stress and the stress hormone cortisol relative to cash and control. This result suggests that insurance may have a “peace of mind” effect, although the most conservative bounds for attrition and multiple inference correction render it statistically insignificant. Together, our results suggest that health insurance may reduce stress in our setting, but its benefits are otherwise limited.

Suggested Citation

  • Haushofer, Johannes & Chemin, Matthieu & Jang, Chaning & Abraham, Justin, 2020. "Economic and psychological effects of health insurance and cash transfers: Evidence from a randomized experiment in Kenya," Journal of Development Economics, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:deveco:v:144:y:2020:i:c:s0304387818310289
    DOI: 10.1016/j.jdeveco.2019.102416
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    Cited by:

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    3. Natasha Pilkauskas & Katherine Michelmore & Nicole Kovski & H. Luke Shaefer, 2022. "The Effects of Income on the Economic Wellbeing of Families with Low Incomes: Evidence from the 2021 Expanded Child Tax Credit," NBER Working Papers 30533, National Bureau of Economic Research, Inc.
    4. McGuire, Joel & Kaiser, Caspar & Bach-Mortensen, Anders, 2020. "The impact of cash transfers on subjective well-being and mental health in low- and middle- income countries: A systematic review and meta-analysis," SocArXiv ydr54, Center for Open Science.
    5. Johannes Haushofer & Robert Mudida & Jeremy P. Shapiro, 2020. "The Comparative Impact of Cash Transfers and a Psychotherapy Program on Psychological and Economic Well-being," NBER Working Papers 28106, National Bureau of Economic Research, Inc.
    6. Bird, Kate & Chabé-Ferret, Bastien & Simons, Alexandre, 2022. "Linking human capabilities with livelihood strategies to speed poverty reduction: Evidence from Rwanda," World Development, Elsevier, vol. 151(C).
    7. Altındağ, Onur & O’Connell, Stephen D., 2023. "The short-lived effects of unconditional cash transfers to refugees," Journal of Development Economics, Elsevier, vol. 160(C).
    8. Noelia Bernal & Joan Costa-i-Font & Patricia Ritter, 2022. "The Effect of Health Insurance on Child Nutritional Outcomes. Evidence from a Regression Discontinuity Design in Peru," CESifo Working Paper Series 9887, CESifo.
    9. Sania Ashraf & Cristina Bicchieri & Upasak Das. Alex Shpenev, 2023. "Valuing Open Defecation Free Surroundings: Experimental Evidence from a Norm-Based Intervention in India," Papers 2312.16205, arXiv.org.
    10. Haushofer, Johannes & Jain, Prachi & Musau, Abednego & Ndetei, David, 2021. "Stress may increase choice of sooner outcomes, but not temporal discounting," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 377-396.
    11. Lei, Xiaoyan & Bai, Chen & Hong, Jingpeng & Liu, Hong, 2022. "Long-term care insurance and the well-being of older adults and their families: Evidence from China," Social Science & Medicine, Elsevier, vol. 296(C).
    12. Mahé, Clotilde, 2020. "Publicly provided healthcare and migration," Economics & Human Biology, Elsevier, vol. 39(C).
    13. Ahmad, Hamna & Hussain, Sadia & Nazif, Muhammad Ahmed, 2021. "Leveraging technology to promote women's health: Evidence from a pilot program," GLO Discussion Paper Series 939, Global Labor Organization (GLO).
    14. Francesco Bogliacino & Cristiano Codagnone & Frans Folkvord & Francisco Lupiáñez-Villanueva, 2023. "The impact of labour market shocks on mental health: evidence from the Covid-19 first wave," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(3), pages 899-930, October.
    15. Natasha V. Pilkauskas & Brian A. Jacob & Elizabeth Rhodes & Katherine Richard & H. Luke Shaefer, 2023. "The COVID Cash Transfer Study: The Impacts of a One‐Time Unconditional Cash Transfer on the Well‐Being of Families Receiving SNAP in Twelve States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(3), pages 771-795, June.
    16. Yonas Alem & Jonathan Colmer, 2022. "Blame it on the rain: Rainfall variability, consumption smoothing, and subjective well‐being in rural Ethiopia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 905-920, May.
    17. Maheshwari Andhavarapu & James Orwa & Marleen Temmerman & Joseph Wangira Musana, 2021. "Maternal Sociodemographic Factors and Antenatal Stress," IJERPH, MDPI, vol. 18(13), pages 1-20, June.

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    More about this item

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics

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