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Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment

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Author Info

  • Jessica Cohen

    (Harvard School of Public Health.)

  • Pascaline Dupas

    (University of California, Los Angeles.)

Abstract

It is often argued that cost-sharing-charging a subsidized, positive price-for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prenatal clinics could sell long-lasting antimalarial insecticide-treated bed nets (ITNs) to pregnant women. We find no evidence that cost-sharing reduces wastage on those who will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that cost-sharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the average prenatal client in the area in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by sixty percentage points when the price of ITNs increases from zero to $0.60 (i.e., from 100% to 90% subsidy), a price still $0.15 below the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of the impact of ITN prices on child mortality that incorporates both private and social returns to ITN usage. Overall, our results suggest that free distribution of ITNs could save many more lives than cost-sharing programs have achieved so far, and, given the large positive externality associated with widespread usage of ITNs, would likely do so at a lesser cost per life saved. (c) 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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Bibliographic Info

Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 125 (2010)
Issue (Month): 1 (February)
Pages: 1-45
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Handle: RePEc:tpr:qjecon:v:125:y:2010:i:1:p:1-45

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Blog mentions

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  1. Free distribution or positive subsidized price?
    by Gulzar in Urbanomics on 2011-03-26 06:37:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
Cited by:
  1. Dionissi Aliprantis, 2012. "Community-based well maintenance in rural Haiti," Working Paper 1201, Federal Reserve Bank of Cleveland.
  2. Dionissi Aliprantis, 2011. "Community-Based Well Maintenance in Rural Haiti," OVE Working Papers 0611, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
  3. Achyuta Adhvaryu, 2011. "Learning, Misallocation, and Technology Adoption: Evidence from New Malaria Therapy in Tanzania," Working Papers 1000, Economic Growth Center, Yale University.
  4. Chassang, Sylvain & Padró i Miquel, Gerard & Snowberg, Erik, 2010. "Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments," CEPR Discussion Papers 8003, C.E.P.R. Discussion Papers.
  5. Hani Mansour & Daniel I. Rees, 2011. "The Effect of Prenatal Stress on Birth Weight: Evidence from the al-Aqsa Intifada," Discussion Papers of DIW Berlin 1108, DIW Berlin, German Institute for Economic Research.
  6. Pascaline Dupas, 2010. "Short-Run Subsidies and Long-Run Adoption of New Health Products: Evidence from a Field Experiment," NBER Working Papers 16298, National Bureau of Economic Research, Inc.
  7. Aprajit Mahajan & Alessandro Tarozzi & Joanne Yoong & Brian Blackburn, 2009. "Bednets, Information and Malaria in Orissa," Working Papers 10-78, Duke University, Department of Economics.
  8. Adhvaryu, Achyuta & Nyshadham, Anant, 2011. "Healthcare Choices, Information and Health Outcomes," Working Papers 88, Yale University, Department of Economics.
  9. Melissa Schettini Kearney & Phillip B. Levine, 2011. "Income Inequality and Early Non-Marital Childbearing: An Economic Exploration of the "Culture of Despair"," NBER Working Papers 17157, National Bureau of Economic Research, Inc.
  10. William Easterly, 2008. "Can the West Save Africa?," NBER Working Papers 14363, National Bureau of Economic Research, Inc.
  11. Tessa Bold & Mwangi Kimenyi & Germano Mwabu & Justin Sandefur, 2011. "Does Abolishing Fees Reduce School Quality? Evidence from Kenya," CSAE Working Paper Series 2011-04, Centre for the Study of African Economies, University of Oxford.

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