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Do non-monetary prices target the poor? Evidence from a field experiment in India

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  • Hoffmann, Bridget

Abstract

This paper uses willingness to pay data from a field experiment in India to study targeting health products to the poor, using monetary prices and non-monetary prices (time costs). I model demand for the product at monetary and non-monetary prices. The model illustrates that monetary prices screen out the poor and that whether non-monetary prices screen out the non-poor is theoretically ambiguous because of opposing income and substitution effects. I find monetary prices select richer households and non-monetary prices do not provide strong selection on income. Both the poor and non-poor appear very elastic in the non-monetary price because of the high value of time in home production. I evaluate the problem of a principal with a fixed budget whose objective places some weight on coverage and some weight on targeting. Despite better targeting with non-monetary prices, the principal optimally chooses a monetary price for a large range of parameters.

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  • Hoffmann, Bridget, 2018. "Do non-monetary prices target the poor? Evidence from a field experiment in India," Journal of Development Economics, Elsevier, vol. 133(C), pages 15-32.
    • Handle: RePEc:eee:deveco:v:133:y:2018:i:c:p:15-32
    DOI: 10.1016/j.jdeveco.2018.01.010
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    More about this item

    Keywords

    Non-monetary price; Self-selection mechanism; Targeting; Willingness to pay; Health products; India;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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