Non-profit and public organizations increasingly rely on the services of community members to deliver and promote health goods. Community member involvement in the distribution of health goods can have significant benefits for the community at large, but only if the commitment and motivation of the community members is sustainable. While there is a significant literature on the role of incentives in the commercial sphere, there is little evidence on how various compensation schemes affect motivation when a task has a social benefit. Standard financial incentives that increase motivation in the commercial sphere may actually crowd-out intrinsic motivation for socially beneficial tasks, which may reduce overall performance. Alternatively, financial incentives may have little impact on performance if individuals drawn to mission-driven organizations place little weight on financial gains. Thus, the question of how to compensate community agents remains a challenge for many non-profit employers who hope to leverage this valuable community resource.
Zambia has one of the world’s highest adult HIV prevalence rates at 14.3 percent. It is estimated that in 2009, 1 million Zambians were living with HIV and 45,000 died of HIV related causes. Although male and female condoms are currently the only protection methods available for HIV, condom use is low and its social acceptability remains problematic. The female condom may be particularly important in the public health community, as it is the only female-controlled tool for HIV/AIDS and other STI prevention. However, like many new technologies, a lack of information about correct use, commonly held misconceptions about the product, and insufficient distribution networks hinder uptake and use of the female condom. This evaluation seeks to investigate the use of hair stylists as private sector channels for the distribution of female condoms.
Description of Intervention:
Researchers partnered with Society for Family Health (SFH) to evaluate their female condom distribution program in Lusaka. SFH’s strategy uses social marketing to promote and distribute health products via community-based agents with connections to the local community. In this case, the community agents were hairdressers and barbers in Lusaka, who were asked to promote female condoms through their shops. Hairstylists were identified as ideal promoters of female condoms both because the familiarity between the stylist and the client creates the potential for successful targeting of female condom to “at risk” customers, and because during the period that a client is in the salon, he or she is a captive audience, allowing the stylist to provide information about the condom.
The study testedthe effect of both financial and non-financial rewards on the selection and performance of agents engaged in promoting female condoms by randomly assigning 1,222 hair stylists to one of four groups:
Small financial rewardtreatment - Individuals received ZMK50 (US$0.01) for each condom pack sold.
Large financial reward treatment- Individuals received ZMK450 (US$0.09) for each condom pack sold.
Non-monetary rewards (Stars) treatment- Individuals received a star for each condom pack sold. Each stylist was provided with a thermometer, akin to those used in charitable fundraisers, which they were instructed to post in a visible location in the salon. Each sale was rewarded with a stamp on the thermometer. In addition, stylists who sold more than 216 packs in a period of one year were invited to a special ceremony at SFH headquarters.
Comparison Group- This group received no incentives, financial or otherwise.
Several key features served to identify the effect of different incentive schemes on performance and the underlying mechanisms: (1) Information was collected on all agents who could have applied for the job, to test whether different incentive contracts attract different agents type; (2) Agents’ performance was measured monthly over a one year horizon, to test whether changes in behavior may be due to a novelty effect; and (3) A modified altruism (dictator) game yielded direct and quantitative measure of the agents’ motivation for the cause, and tested whether financial incentives reduced performance by crowding out intrinsic motivation.
Condom Sales:Non-financial incentives were the most effective at generating female condom sales. Hair stylists in the “star” treatment sold twice as many packs of condoms (14 vs 7) as agents in any other group. In other words, the likelihood of selling at least one pack was 12 percentage points higher for agents in the star treatment; this represents a 33 percent increase over the mean of the control group. Agents in the high and low financial reward treatments, in contrast, were not more likely to sell at least one pack than agents in the control group. However, the sales levels overall were generally low. Even in the star treatment, the average promoter sold slightly more than one pack per month.
Mechanisms of impact: Further analysis indicates that the non-financial incentives operated through two channels. First, non-financial incentives seemed to leverage intrinsic motivation for the cause - they were more than twice as effective for stylists who are motivated by the cause, as measured both by their donation in the altruism game and by personal characteristics correlated with motivation. Second, non-financial incentives appear to have facilitated social comparison among stylists - the impact of the incentives increased with the number of neighboring salons that received the same treatment.
Contrary to existing evidence, researchers found no evidence that financial incentives crowded out intrinsic motivation. On the contrary, high financial rewards were more effective for agents who scored higher on our motivation measure.
Many farming households turn to off-farm work to make ends meet between harvests, reducing the amount of time they can invest in increasing their farms’ productivity. In ongoing work in Zambia, researchers are testing the relationship between scarcity, labor supply and agricultural productivity. Selected farmers receive access to either cash or food loans during they lean season that they are responsible for repaying at harvest. Researchers will track a variety of outcomes including yields, labor supply, food consumption and how impacts vary within the household and by loan type. In a pilot, already completed, food loans were shown to increase food consumption during the lean season, reduce the portion of households engaging in off-farm work, and increase wages. In the pilot, both take up and repayment rates were over 90 percent and results clearly established the relevance of hunger as a driver of labor supply decisions.
Researchers are testing the effects of food and cash loans on labor supply and agricultural productivity. They have completed a preliminary, pilot study to establish the relationship between food shortages and labor supply. A larger study is ongoing.
Pilot study: There was high take-up of the loans, and villages where loans were offered saw an increase in food consumption, a decline in the number of households engaging in casual day labor, and an increase in wages for those who did engage in casual labor. The impacts were larger in villages where all eligible households could take out a loan.
In sub-Saharan Africa, young girls drop out of school at higher rates than boys. Parents often invest more in sons than in daughters, by allowing them more resources for education, such as school fees, and time away from house chores for studying. Adolescent girls are also more likely to contract HIV from older, more sexually active male partners, on whom they often depend for financial resources. Girls’ education and negotiation skills for women are therefore viewed as important tools for reducing school dropout rates, early pregnancies and the HIV rate among young women. This study, conducted in the capital of Zambia, assesses the impact of teaching girls negotiation skills on health and education outcomes.
When young girls drop out of school, they are often unable to develop the skills necessary to support themselves. They often rely on male partners for resources, and those partners often demand sex in return for financial support. Such relationships are prevalent across sub-Saharan Africa, leaving young girls highly vulnerable to HIV infection and unwanted pregnancy, evidenced by the two-to-one ratio of HIV rates among young women versus their male counterparts.  The World Health Organization has identified negotiation skills for women and expanded efforts to keep girls in school as critical tools for reducing HIV rates among women in sub-Saharan Africa.  Designing school curriculum to provide girls with a stronger education and new skill sets has the potential to change gender dynamics and improve health outcomes for this vulnerable population.
Context of the Evaluation:
School data for Zambia shows a dramatic decline in female enrollment from primary to secondary school years. While this drop is normally attributed to the commencement of school fees in the eighth grade, a closer look reveals that school dropout rate increases prior to the fee increase. In grade five, the drop-out rate is three times higher for girls than boys. 
This project tests the impact of negotiation training in addition to the current school curricula on HIV/AIDS, health, and education outcomes among Zambian girls. Through a randomized controlled trial, this study analyzes whether negotiation skills that allow a girl to reshape her understanding of a conflict and her communications with others, can ultimately result in more favorable resource allocations.
Details of the Intervention:
This study isolates the impact of teaching information versus teaching negotiation by layering two interventions on top of a "social capital" program, including time with other girls in a safe space.
About 2,400 grade eight girls from across 20 schools in Lusaka will be randomly assigned to participate in one of three two-week programs. About 120 girls will be engaged per school, with roughly 40 girls in each program:
Social capital: girls meet after school to play games; receive a snack notebooks, and pens
Information: girls meet after school to learn information on HIV and importance of schooling and to play games, also receive a snack, notebooks, and pens
Negotiation plus information: girls receive above program plus negotiation training
The Negotiation Curriculum is structured by four principles: "Me," or identifying one’s own interests and options in conflict situations; "You," or identifying the other person’s interests, needs, and perspective; "Together," or identifying shared interests and small trades; and "Build," or developing win-win solutions. The curriculum also accounts for some negotiations in which it is necessary to be patient, or "Take 5," and others in which the only outcome to keep the girl safe and healthy is to walk away and not negotiate.
Outcome measures will measure both the size and source of impact, capturing transformations in the girl's capabilities, her interactions with others, and the outcomes of those interactions:
Survey data: Self-perception, outcomes of arguments and discussion, reported locus of control, intra-household allocations, and sexual risk exposure. Impact on the family measured through parent and sibling surveys to see if gains in participant well-being come at the expense of other family members.
Real outcomes (administrative data from schools): Rates of pregnancy, school attendance and advancement, and potentially STI/HIV rates
Behavioral measures: Take-up of an additional opportunity that requires child-parent negotiation, altered willingness to pay for schooling by parents, responses to negotiation scenario or partner game.
Results forthcoming. If successful, this program curriculum could be scaled up countrywide in partnership with the Ministry of Education to increase schooling attainment and lower HIV infections at a relatively low cost.
For more information about this project, click here.
In many parts of sub-Saharan Africa, community health workers are viewed as one way to address the shortage of trained health care personnel. Zambia’s government aims to train 5,000 new community health workers by 2017. Before doing so, they partnered with IPA to determine the best way to recruit these workers. Do financial incentives or non-financial incentives attract the best new recruits? By introducing two different recruitment programs, one focusing on recruiting socially motivated individuals, and the other focusing on recruiting career motivated individuals, to different randomly selected communities, this study aims to determine the most successful methods of recruiting and motivating these workers.
Community health workers (CHWs) are commonly regarded as a potential solution to the shortage of formal health workers throughout sub-Saharan Africa. Recruited from their communities, trained, and then deployed back to their communities, it is thought that CHWs are more likely to have the necessary relationships, local knowledge, and sense of community responsibility to deliver health services to underserved populations in rural areas, where retention of formal health workers is a perennial challenge.
While small-scale, informal CHW programs have existed for many years, recently many countries in sub-Saharan Africa have sought to formalize the CHW cadre and implement national CHW programs at scale. Little is known, however, about how to carry out this process effectively. In particular, there is a dearth of evidence on two fundamental questions: Who are the ‘right’ people within communities to become CHWs, and how can incentives be used to motivate CHWs to the highest performance levels? Recruiting the best workers and motivating them effectively are critical for ensuring low turnover and high performance of a national CHW workforce.
Context of the Evaluation:
In 2010, the Government of Zambia announced a new national Community Health Worker Strategy that will aim to train 5,000 new CHWs by 2015—a massive investment in a country with only 6,000 nurses. These community health workers will undergo a year of formal training, and will then be posted back to their rural communities, where it is envisioned that they will do most of their work directly within the community, rather than operating from a health facility. The national strategy intends that CHWs will be the first line of health care for Zambians living in the most remote regions of the country.
Before launching the full strategy, the Government of Zambia is implementing a pilot study involving the recruitment, training, and deployment of 315 community health workers across 48 rural districts to examine the most successful methods of recruiting and compensating CHWs.
Description of Intervention:
To examine the selection of community health workers, two recruitment treatments will be used in the pilot study, which will vary in the way in which the job opportunity is framed. In a randomly selected half of the 48 participating districts, recruitment messages will emphasize the “community” benefits of becoming a CHW, such as serving and being a leader in one’s community. In the other half, recruitment efforts will emphasize the “career” benefits of becoming a CHW, such as opportunities for promotion or further professional development. The hypothesis of this experiment is that the recruitment treatments will select for CHWs who possess different characteristics and motivations, and those differences may predict long-term retention and performance.
Furthermore, in collaboration with the Government of Zambia, researchers are refining a set of incentive schemes that will be tested in order to understand how they affect CHW motivation and performance. It is expected that the final schemes will focus on non-monetary incentives, such as providing CHWs with professional feedback, social recognition, and career advancement opportunities. By randomly allocating the same 48 districts to receive different incentives, the project will be able to test both the overall effects of different reward schemes as well as how the schemes interact with the manner in which CHWs were recruited.
The immediate goal of this study is to provide practical guidance to the Government of Zambia as it prepares to implement the full national CHW strategy. More broadly, this study will give insight to governments and policy makers on how various sources of social recognition (e.g., from government, peers, or the community) and methods of performance feedback (e.g., absolute or relative) can affect the recruitment and motivations of health workers, in ways that potentially predict job performance.
Can male partners play a role in improving reproductive health among women in developing countries? Evidence suggests women are less likely to seek contraception if their husbands are present, but what if men are educated first about the risks of bearing multiple children close together? This evaluation in Zambia assesses whether providing men or women information on maternal mortality risks in addition to regular family planning information can change attitudes toward family planning and lower fertility rates by aligning fertility preferences between men and women.
As much as 50% of all pregnancies worldwide are unplanned or unwanted, accounting for nearly 300,000 new pregnancies every day. The ability to control fertility can have broad social and economic consequences since families experiencing unwanted pregnancies may find it harder to pay for their children’s education, healthcare and general wellbeing. Recent evidence suggests that access to contraceptives may improve economic outcomes and reduce poverty by allowing women to optimally time births, increasing investment in education and participation in the labor market at childbearing ages. There are also direct consequences for individual well-being: significant reported need for contraceptives suggests that people are having more children than they desire in many parts of the developing world. One possible reason is that in many countries men dominate decisions regarding sexual relations and contraception, and spousal discordance may influence fertility outcomes.
Male involvement is a growing trend in reproductive health, but has the potential to do more harm than good if men oppose contraceptive use due to misinformation or personal biases. A past study found that women were less likely to seek family planning services if their husbands were present when the services were offered, implying that unmet need for fertility and excess fertility may reflect underlying differences between partner preferences. However, because survey responses indicated that family planning was primarily being used for child spacing, rather than controlling total family size, male preferences may be malleable if they are educated on the adverse health effects of bearing multiple children close together without adequate time for the mother’s recovery.
Context of the Evaluation:
Zambia currently holds one of the world’s highest maternal mortality ratios, with 729 maternal deaths per 100,000 live births, and a similarly high infant mortality ratio with 92 deaths per 1,000 live births. Family planning and reproductive health services are not uniformly available throughout the country, and 60% of currently pregnant women in Lusaka report that the pregnancy was unwanted. Although 100% of women reporting unwanted pregnancies report being familiar with at least one method of modern contraception, including pills, condoms, injectable contraceptives and contraceptive implants, only 48% of women have ever used any modern method of contraception, and only 37% currently use modern contraceptives. This study is a follow-up to a two-year study in 2007 that found that women were less likely to seek family planning services if their husbands were present when the services were offered.
Details of the Intervention:
This study will investigate potential avenues to involve male partners in family planning decisions, both by understanding the origins of male preferences and designing educational measures to better inform them about the importance of family planning. By providing information on the increased risk of maternal mortality when a woman has children too close together, this program aims to increase male acceptance of family planning, and therefore improve the ability to involve males in health decisions without risking female health.
Approximately three-quarters of the couples will be randomly assigned to one of three treatment groups, while the rest will serve as a comparison group. One group of couples will receive information on family planning and maternal health in a one-on-one setting. This will include information on the risk of maternal mortality and morbidity, how it grows with age and number of children, its causes and how family planning can be used to help women by spacing births and reducing family size. A second group will receive this information through community meetings. A third treatment group will receive the information on family planning both one-on-one and in a community meeting. All participants will be asked to sign up for a family planning consultation following the educational session. The comparison group will be asked to answer a survey, and then also be asked to sign up for a family planning counseling session. The participants’ take up of the family planning consultation and subsequent demand of and attitudes toward family planning will be used to measure each intervention’s success. Contraceptive use and fertility outcomes will be monitored through clinic data. Couples will also be surveyed again after one year to measure subsequent fertility and stated preferences for children and for family planning.
Many climate change programs that target small-scale farmers seek to change farmers’ agricultural practices, whether to sequester additional carbon or to improve climate resiliency. Farmers are often hesitant to adopt new practices as they often entail high upfront costs. Climate change programs therefore generally provide inputs or incentives for adopting and complying with the program’s objectives. Yet it is unclear how much farmers respond to inputs and incentives, and to which they respond more favorably. This study in Zambia assesses the impact of two programs, one that provides incentives to farmers to grow a nitrogen-fixing tree, and another that provides inputs.
Financing for carbon offset investments is growing quickly. The voluntary market for carbon offsets traded over 700 million dollars worth of emissions reductions in 2008, a third of which came from land use projects. These investments have the potential to benefit smallholder farmers, not only by creating revenue from selling carbon credits, but also by incentivizing more climate-resilient agricultural practices and technologies to increase production. Many climate change programs that target smallholder farmers seek to modify current agricultural practices, whether to sequester additional carbon or to improve climate resiliency. Because these changes often impose costs on the farmer, many programs provide upfront inputs or incentives for adopting and complying with the program’s objectives.
However, in spite of a growing number of NGO- and government-led adaptation and climate resilience projects, farmer adoption remains a challenge and concerns persist due to the high cost of inputs, training and monitoring in comparison to the value of the credits earned from sequestered carbon. A more rigorous understanding of the relationship between input costs, compliance incentives and program outcomes may help improve the success and cost effectiveness of both carbon offsets and climate resiliency programs. To date, none of the numerous programs that offer landholders inputs or performance payments have systematically varied contract design to generate causal evidence on the determinants of program success. This study proposes address this knowledge gap in the context of a program promoting fertilizer trees in Eastern Zambia.
The project implementation is designed to allow the researchers to investigate (a) the role of option value in shaping farmer decisions, and (b) the effect of cost sharing and performance incentives on selection into the project and on long-run performance under the contract.
The partner organization, Mitengo Zambia promotes a fertilizer tree (Faidherbia albida), locally known as the masangu tree, both for its carbon sequestration potential and its ability to help farmers adapt to a changing climate. Faidherbia fixes nitrogen in its leaves, providing benefits to farmers, including better soil fertility, maize yields and resilience to climate change. To grow the tree, seedlings must be purchased and raised, and then planted among low growing crops, weeded and watered. These adoption costs are highest in the first year and tree survival is low.
Mitengo Zambia has partnered with Dunavant Cotton to investigate the carbon sequestration and soil fertility potential of encouraging agroforestry adoption among Dunavant farmers. Findings from the research phase will be incorporated in program scale-up with Dunavant Zambia Limited, a leading cotton ginning company in Zambia.
Description of the Intervention:
Around 2,000 outgrower farmers associated with Dunavant cotton in Chipata, Eastern Province, Zambia receive training and subsidized inputs (seedlings) for growing Faidherbia on their land. Most Dunavant farmers produce on a small-scale, with a mean landholding size in the study sample of around one hectare, and have access to loans for cotton inputs from Dunavant. The company organizes the farmers into groups of approximately 15 geographically clustered farmers. Each group has one lead farmer who, under the Dunavant system, is responsible for training his farmer group on cotton production and, under the Mitengo Zambia program, on Faidherbia planting and management.
Lead farmers organize trainings on Faidherbia for their groups of farmers, which are attended by Mitengo Zambia and IPA staff who assist with administration of the treatments and the baseline survey.
After their training, farmers decide whether to join the program based on two factors:
(1) Variation in input prices – Farmer groups will be randomly assigned to receive one of four input prices that range from fully subsidized (free) to the cost-recovery price for the implementing organization (approximately $2.50 US). A transport allowance (of $2.50), provided to the farmers to remunerate any transportation costs of attending the lead farmer's training, ensures that farmers have enough cash to make a participation decision based on willingness to pay, not on liquidity constraints. Variation in input prices allows researchers to test hypotheses on risk and on cost-sharing. Specifically, how the probability of take-up changes as the input prices increase, controlling for individual characteristics and incentives, will be assessed.
(2) Variation in incentives – Individuals will be randomly assigned to receive different levels of incentive pay, which farmers are informed of either before or after making their take-up decision. The range of incentives is based on project pilots from the previous year, which ranged from $0 - $30 (0 - 150,000 ZMK). The use of scratch-off cards to reveal the incentives ensures that incentives cannot be manipulated and that the variation is perceived as fair by the participants. Incentives will be paid after one year, conditional on 70% tree survival. All farmers received 50 seedlings. The variation in incentives will allow researchers to test the causal effect of incentives, by comparing the probability of take-up and the rate of tree survival for farmers at different incentive levels, controlling for individual characteristics.
At the time of training, farmers receive a detailed baseline household questionnaire that includes modules on demographics, socioeconomic status, agriculture and environmental knowledge. The survey is administered to all farmers who attend the training, regardless of their decision to participate. One year after contracts are initiated, all participating farmers will be visited and the number of surviving trees recorded, an incentive payments delivered on the basis of tree survival.
Summary results forthcoming.
See more information including detailed findings from an in-country event with cross-sector stakeholders from the Zambian government, private sector, international donor and research community, and leading non-governmental organizations here.
Conte, M. and M. Kotchen. Explaining the price of voluntary carbon offsets. Working Paper. (2009)
As much as 75% of all pregnancies worldwide are unplanned or unwanted, accounting for nearly 300,000 new pregnancies every day.1 To the extent that rapid population growth can lead to low levels of human capital investment and continued poverty for future generations, the ability to control fertility can have broad social and economic consequences. Recent evidence suggests that access to contraceptives may improve economic outcomes and reduce poverty by allowing women to optimally time births, increasing women’s investment in education and participation in the labor market at childbearing ages. There are also direct consequences for individual well-being: significant reported need for contraceptives suggests that fertility outcomes outstrip fertility desires in many parts of the developing world.
Women’s unmet need for contraceptives is commonly explained by three factors: (i) insufficient supply of appropriate contraception; (ii) lack of information or misinformation about those methods; and (iii) restrictive social norms governing fertility control. An alternative hypothesis is that excess fertility reflects the outcome of bargaining between partners with divergent fertility preferences. In many countries men dominate decisions regarding sexual relations and contraception, and spousal discordance may be a prominent factor influencing fertility outcomes.
Context of the Evaluation:
Zambia currently holds one of the world’s highest maternal mortality ratios, with 729 maternal deaths per 100,000 live births,2 and a similarly high infant mortality ratio with 103 deaths per 1,000 live births.3 Family planning and reproductive health services are not uniformly available throughout the country, and 60% of currently pregnant women in Lusaka report that the pregnancy was unwanted. Although 100% of women reporting unwanted pregnancies report being familiar with at least one method of modern contraception, only 48% have ever used any modern method of contraception, and only 37% currently use modern contraceptives.
Details of the Intervention:
This study evaluates the effect of male involvement on female contraceptive use through an experiment designed to remove the factors of insufficient supply, lack of information, misinformation, and divergent fertility preferences. Study participants include 1,994 married women who had given birth in the last two years living in compounds serviced by Chipata Clinic in Lusaka.
Women in the study received vouchers that granted appointments with a family planning nurse at the local government clinic, without waiting more than one hour and with guaranteed access to the modern contraceptive method of their choice. An information session explaining all methods of family planning was also given to study participants at the time of voucher distribution. Women were randomized into two treatment groups. In the “individual” arm of the study, women were given these vouchers alone. In the “couples” arm, women were given these vouchers in the presence of their husbands. In all other respects, the experimental protocol in the individual and couples arms was identical.
Results and Policy Lessons:
Take up of the voucher was high at 47%, indicating that women valued the substantial reduction in the time cost of an appointment associated with the voucher.
However, evidence suggests that sharing information about family planning services with husbands reduces the couple’s propensity to utilize these services. Women who received the voucher in the presence of their husbands were 9 percentage points (18%) less likely to use the voucher to obtain an appointment at a family planning clinic. There is an even larger, 12 percentage point reduction in voucher use for couples where the husband reported wanting more children than the wife. Still a larger reduction in use is reported among younger couples, giving evidence for the hypothesis that differences in future preferences for fertility drive differences in demand for family planning services.
Male knowledge of the voucher led to a substantial reduction in use of these services, suggesting that policies or technologies that shift relative control of contraceptive methods from men to women may significantly increase contraceptive use and reduce average fertility in some contexts. This is important to note given that an increasing number of policymakers have started to promote “male involvement” in family planning. It also suggests that take up of particular modern contraceptive methods may be sensitive to the amount of control women can exercise relative to their husbands in the use of these methods.
More than 1 billion people living in low-income countries do not have access to clean drinking water,1 leaving them at risk for diarrheal diseases which are transmitted when a water supply is contaminated with fecal matter. Diarrhea remains a serious concern in low-income countries, where it caused 2.6 million deaths per year between 1990 and 2000.2 Even when diarrheal episodes do not prove fatal, they can have long-term consequences on a child’s cognitive and physical development. Multiple interventions from handwashing to water source protection have been considered, but questions remain. Particularly, it is not known whether people will be more likely to use a product if it is given for free, or if the consumer is charged a small positive price.
Context of the Evaluation:
Contaminated water is a leading cause of diarrhea in Zambia, where only 64% of the population has access to safe drinking water sources. Among children under five, 21% have had diarrhea in the past two weeks, regardless of water source or location.3 Many homes in Lusaka, Zambia’s largest city, obtain water from un-sanitized sources. Clorin, an inexpensive chlorine bleach solution used to kill pathogens in drinking water, is a popular product in Zambia to reduce the incidence of water-borne illnesses, and approximately 80% of people have used it at some point. Charging for this effective health intervention could potentially discourage use, but by virtue of having paid for it, it is also possible that people might value the product more, increasing its use. Because it is hard to determine using observational data whether higher prices results in more product usage, or simply deliver the product to those who value it most, an experiment is needed help separate the effects.
Details of the Intervention:
Researchers present evidence on the effect of prices on product use from a large-scale field experiment. The intervention consisted of a door-to-door sale of Clorin at a randomly chosen, below-market “offer price” to about 1,260 households with poor access to piped water or chlorine home-delivery. Clorin, retailing for about 25 cents, is inexpensive so as not to discourage use based on income. Those who chose to buy the product were then offered a randomly chosen discount, allowing for a varied “transaction price”. Researchers returned to those households and conducted a follow-up survey and chemical water test to determine how often Clorin was used.
Screening and Sunk Cost Effect:Researchers sought to find whether higher prices can help target those who would most use the product (screening effect) by seeing if, as the offer price rose, those who chose to buy Clorin had higher usage, implying higher expected benefits. Researchers also sought to determine whether higher prices resulted in a higher propensity to use (sunk cost effect). Assuming households incur a higher psychological cost if they do not use a product they have paid more for, they will be likely to use Clorin if the price was increased. Therefore, for a given offer price, a higher transaction price could lead to a stronger desire to rationalize one’s purchase through use.
Results and Policy Lessons:
Impact on Clorin Use:Researchers found that fewer people bought Clorin as the price rose; for every 1% increase in price there was a 0.67% decrease in quantity demanded. However higher prices did appear to screen out those who would not have used the product in any event, and a higher willingness to pay was associated with greater propensity to use. As the offer price increased by 10%, use increased by 4% on average among those who did buy the Clorin. No sunk cost effect was observed.
Overall, the use of chlorine does decrease with higher prices due to dampened demand, but this decline is partially offset by better targeting of the product to families who are likely to use it. Significantly, there was no evidence that higher offer prices screened out poorer or less educated households.