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Informal Payments And Health Worker Effort: A Quantitative Study From Tanzania

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  • Ida Lindkvist

Abstract

Informal payments—payments made from patients to health personnel in excess of official fees—are widespread in low‐income countries. It is not obvious how such payments affect health worker effort. On the one hand, one could argue that because informal payments resemble formal pay for performance schemes, they will incite higher effort in the health sector. On the other hand, health personnel may strategically adjust their base effort downwards to maximise patients' willingness to pay informally for extra services. To explore the relationship between informal payments and health worker effort, we use a unique data set from Tanzania with over 2000 observations on the performance of 156 health workers. Patient data on informal payments are used to assess the likelihood that a particular health worker accepts informal payment. We find that health workers who likely accept payments do not exert higher average effort. They do however have a higher variability in the effort they exert to different patients. These health workers are also less sensitive to the medical condition of the patient. A likely explanation for these findings is that health workers engage in rent seeking and lower baseline effort to induce patients to pay. Copyright © 2012 John Wiley & Sons, Ltd.

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  • Ida Lindkvist, 2013. "Informal Payments And Health Worker Effort: A Quantitative Study From Tanzania," Health Economics, John Wiley & Sons, Ltd., vol. 22(10), pages 1250-1271, October.
  • Handle: RePEc:wly:hlthec:v:22:y:2013:i:10:p:1250-1271
    DOI: 10.1002/hec.2881
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    1. Li, Mingqiang & Li, Zhihui & Yip, Chi-Man (Winnie), 2022. "Informal payments and patients’ perceptions of the physician agency problem: Evidence from rural China," Social Science & Medicine, Elsevier, vol. 298(C).
    2. Williams, Colin C. & Horodnic, Adrian V., 2017. "Rethinking informal payments by patients in Europe: An institutional approach," Health Policy, Elsevier, vol. 121(10), pages 1053-1062.
    3. Nikolaos Grigorakis & Christos Floros & Haritini Tsangari & Evangelos Tsoukatos, 2017. "Combined social and private health insurance versus catastrophic out of pocket payments for private hospital care in Greece," International Journal of Health Economics and Management, Springer, vol. 17(3), pages 261-287, September.

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