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Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial

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  • Jessica Cohen
  • Pascaline Dupas
  • Simone G. Schaner

Abstract

Both under- and over-treatment of communicable diseases are public bads. But efforts to decrease one run the risk of increasing the other. Using rich experimental data on household treatment-seeking behavior in Kenya, we study the implications of this tradeoff for subsidizing life-saving antimalarials sold over-the-counter at retail drug outlets. We show that a very high subsidy (such as the one under consideration by the international community) dramatically increases access, but nearly half of subsidized pills go to patients without malaria. We study two ways to better target subsidized drugs: reducing the subsidy level and introducing rapid malaria tests over-the-counter.

Suggested Citation

  • Jessica Cohen & Pascaline Dupas & Simone G. Schaner, 2012. "Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial," NBER Working Papers 17943, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17943 Note: CH HE
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    References listed on IDEAS

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    1. Jessica Cohen & Pascaline Dupas, 2008. "Free Distribution or Cost-Sharing? Evidence from a Malaria Prevention Experiment," NBER Working Papers 14406, National Bureau of Economic Research, Inc.
    2. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
    3. Olmstead, Todd & Zeckhauser, Richard, 1999. "The menu-setting problem and subsidized prices: drug formulary illustration," Journal of Health Economics, Elsevier, vol. 18(5), pages 523-550, October.
    4. Michael Kremer & Jessica Leino & Edward Miguel & Alix Peterson Zwane, 2011. "Spring Cleaning: Rural Water Impacts, Valuation, and Property Rights Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 145-205.
    5. Achyuta Adhvaryu, 2011. "Learning, Misallocation, and Technology Adoption: Evidence from New Malaria Therapy in Tanzania," Working Papers 1000, Economic Growth Center, Yale University.
    6. Björkman Nyqvist, Martina & Svensson, Jakob & Yanagizawa-Drott, David, 2012. "Can Good Products Drive Out Bad? Evidence from Local Markets for (Fake?) Antimalarial Medicine in Uganda," CEPR Discussion Papers 9114, C.E.P.R. Discussion Papers.
    7. 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.
    8. Adhvaryu, Achyuta, 2011. "Learning, Misallocation, and Technology Adoption: Evidence from New Malaria Therapy in Tanzania," Working Papers 92, Yale University, Department of Economics.
    9. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 1-45.
    10. Jishnu Das & Jeffrey Hammer & Kenneth Leonard, 2008. "The Quality of Medical Advice in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 93-114, Spring.
    11. Pascaline Dupas, 2011. "Health Behavior in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 425-449, September.
    12. Alessandro Tarozzi & Aprajit Mahajan & Brian Blackburn & Dan Kopf & Lakshmi Krishnan & Joanne Yoong, 2014. "Micro-loans, Insecticide-Treated Bednets, and Malaria: Evidence from a Randomized Controlled Trial in Orissa, India," American Economic Review, American Economic Association, vol. 104(7), pages 1909-1941, July.
    13. Gertler, Paul J. & Hammer, Jeffrey S., 1997. "Strategies for pricing publicly provided health services," Policy Research Working Paper Series 1762, The World Bank.
    14. Leonard, Kenneth L., 2009. "The cost of imperfect agency in health care: Evidence from rural Cameroun," Journal of Development Economics, Elsevier, vol. 88(2), pages 282-291, March.
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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • 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
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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