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Learning, Misallocation, and Technology Adoption: Evidence from New Malaria Therapy in Tanzania

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  • Achyuta Adhvaryu

Abstract

I study how the misallocation of new technology to individuals, who have low ex post returns to its use, affects learning and adoption behaviour. I focus on anti-malarial treatment, which is frequently over-prescribed in many low-income country contexts where diagnostic tests are inaccessible. I show that misdiagnosis reduces average therapeutic effectiveness, because only a fraction of adopters actually have malaria, and slows the rate of social learning due to increased noise. I use data on adoption choices, the timing and duration of fever episodes, and individual blood slide confirmations of malarial status from a pilot study for a new malaria therapy in Tanzania to show that individuals whose reference groups experienced fewer misdiagnoses exhibited stronger learning effects and were more likely to adopt.

Suggested Citation

  • Achyuta Adhvaryu, 2014. "Learning, Misallocation, and Technology Adoption: Evidence from New Malaria Therapy in Tanzania," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1331-1365.
    • Handle: RePEc:oup:restud:v:81:y:2014:i:4:p:1331-1365
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    File URL: http://hdl.handle.net/10.1093/restud/rdu020
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    JEL classification:

    • 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
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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