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Information and subsidies: Complements or substitutes?

Author Info

Listed author(s):
  • Ashraf, Nava
  • Jack, B. Kelsey
  • Kamenica, Emir

Abstract

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167268112003034
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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 88 (2013)
Issue (Month): C ()
Pages: 133-139

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Handle: RePEc:eee:jeborg:v:88:y:2013:i:c:p:133-139
DOI: 10.1016/j.jebo.2012.12.031
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

Keywords: Subsidies; Information; Health;

Find related papers by JEL classification:

  • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
  • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

References listed on IDEAS
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  1. Ori Heffetz & Moses Shayo, 2009. "How Large Are Non-Budget-Constraint Effects of Prices on Demand?," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 170-199, October.
  2. Emily Oster & Rebecca Thornton, 2009. "Determinants of Technology Adoption: Private Value and Peer Effects in Menstrual Cup Take-Up," NBER Working Papers 14828, National Bureau of Economic Research, Inc.
  3. Wedig, Gerard J. & Tai-Seale, Ming, 2002. "The effect of report cards on consumer choice in the health insurance market," Journal of Health Economics, Elsevier, vol. 21(6), pages 1031-1048, November.
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  6. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
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  9. Groh, Matthew & Krishnan, Nandini & McKenzie, David & Vishwanath, Tara, 2012. "Soft skills or hard cash ? the impact of training and wage subsidy programs on female youth employment in Jordan," Policy Research Working Paper Series 6141, The World Bank.
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  12. Nava Ashraf & James Berry & Jesse M. Shapiro, 2010. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia," American Economic Review, American Economic Association, vol. 100(5), pages 2383-2413, December.
  13. Pascaline Dupas, 2009. "What Matters (and What Does Not) in Households' Decision to Invest in Malaria Prevention?," American Economic Review, American Economic Association, vol. 99(2), pages 224-230, May.
  14. Doi, Yoko & McKenzie, David & Zia, Bilal, 2012. "Who you train matters : identifying complementary effects of financial education on migrant households," Policy Research Working Paper Series 6157, The World Bank.
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  16. Hoyer, Wayne D & Brown, Steven P, 1990. " Effects of Brand Awareness on Choice for a Common, Repeat-Purchase Product," Journal of Consumer Research, Oxford University Press, vol. 17(2), pages 141-148, September.
  17. Jalan, Jyotsna & Somanathan, E., 2008. "The importance of being informed: Experimental evidence on demand for environmental quality," Journal of Development Economics, Elsevier, vol. 87(1), pages 14-28, August.
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Cited by:

  1. Greg Fischer & Dean Karlan & Margaret McConnell & Pia Raffler, 2014. "To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda," NBER Working Papers 20170, National Bureau of Economic Research, Inc.
  2. Papoutsi, Georgia & Nayga, Rodolfo & Lazaridis, Panagiotis & Drichoutis, Andreas, 2013. "Nudging parental health behavior with and without children's pestering power: Fat tax, subsidy or both?," MPRA Paper 52324, University Library of Munich, Germany.
  3. Olivier Body, 2014. "When Is Speech Silver and Silence Golden ?A Field Experiment on an Information Campaign," Working Papers ECARES ECARES 2014-32, ULB -- Universite Libre de Bruxelles.
  4. Robinson, Scott A. & Rai, Varun, 2015. "Determinants of spatio-temporal patterns of energy technology adoption: An agent-based modeling approach," Applied Energy, Elsevier, vol. 151(C), pages 273-284.
  5. Fischer, Greg & Karlan, Dean S. & McConnell, Margaret & Raffler, Pia, 2014. "To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda," CEPR Discussion Papers 9999, C.E.P.R. Discussion Papers.
  6. B. Kelsey Jack & Paulina Oliva & Christopher Severen & Elizabeth Walker & Samuel Bell, 2015. "Technology Adoption Under Uncertainty: Take-Up and Subsequent Investment in Zambia," NBER Working Papers 21414, National Bureau of Economic Research, Inc.
  7. Anja Sautmann & Samuel Brown & Mark Dean, 2016. "Subsidies, Information, and the Timing of Children’s Health Care in Mali," Working Papers 2016-2, Brown University, Department of Economics.
  8. Katherine P. Adams & Travis J. Lybbert & Stephen A. Vosti & Emmanuel Ayifah, 2016. "Using an economic experiment to estimate willingness-to-pay for a new maternal nutrient supplement in Ghana," Agricultural Economics, International Association of Agricultural Economists, vol. 47(5), pages 581-595, 09.
  9. Meredith, Jennifer & Robinson, Jonathan & Walker, Sarah & Wydick, Bruce, 2013. "Keeping the doctor away: Experimental evidence on investment in preventative health products," Journal of Development Economics, Elsevier, vol. 105(C), pages 196-210.
  10. Greg Fischer & Dean Karlan & Margaret McConnell & Pia Raffler, 2014. "To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda," Working Papers 1041, Economic Growth Center, Yale University.
  11. Bejenariu, Simona & Mitrut, Andreea, 2014. "Bridging the Gap for Roma Women: The Effects of a Health Mediation Program on Roma Prenatal Care and Child Health," Working Papers in Economics 590, University of Gothenburg, Department of Economics.
  12. Papoutsi, Georgia S. & Nayga, Rodolfo M. & Lazaridis, Panagiotis & Drichoutis, Andreas C., 2015. "Fat tax, subsidy or both? The role of information and children's pester power in food choice," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 196-208.
  13. Suchita Srinivasan, 2016. "The light at the end of the tunnel: the impact of policy on the global diffusion of fluorescent lamps," CIES Research Paper series 45-2016, Centre for International Environmental Studies, The Graduate Institute.

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