No margin, no mission? A field experiment on incentives for public service delivery

The experiment utilizes one of the existing programs of Society for Family Health (SFS) that used hair salons in Lusaka to distribute female condoms. Hairstylists were identified as ideal agents for the delivery of this health service, both because the familiarity between the stylist and the client creates the potential for successful targeting of female condoms 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 HIV prevention generally, and specifically about the female condom. Finally, hair salons are numerous and distributed throughout Lusaka thus making the intervention easily scalable if successful.

Sample hairstylists, selected through a census of all salons in the Lusaka (described below) were invited for a one-day training program and randomly allocated to four different reward structures: (i) no margin on sale (control group) (ii) a financial margin of 10% on retail price (iii) a financial margin of 90% on retail price (iv) non-financial treatment group where each sale was rewarded with a star stamped on a thermometer display, which is labeled as measuring the stylist's contribution to the health of their community. After the training, interested agents were given promotional materials and a starting stock of 12 packs sold to them at a subsidized price.

SFH officers visited the hair salons once every month to restock the agent and to pay rewards if any were due. They checked certain metrics of effort such as display of promotional materials, completeness of log books, interest in continuing to deliver this service and attentiveness during the visit.

2009-10-01

2010-12-31

Number of female condoms sold by agents

Other measures of stylist effort: display of promotional materials, completion of log books, measures of stylist interest and attention.

Sales performance measured by the number of packs each stylist restocks from SFH over the study period. Restocking is precisely measured from SFH inventory data and checked against invoices signed by the agents upon purchase.

An alternate measure of performance is calculated by SFH sales representatives, by subtracting the hairdresser's stock at month t from the sales representative's record of stock at t − 1. Sales representatives measure stock each time they visit the salon by counting the number of packs on display and confirming with the stylists that no other packs are stored elsewhere. This variable suffers from measurement error due to the fact that unsold packs might not be visible to the SFH representative and/or hidden intentionally.

When SFH representatives visited the salons, they also recorded measures of stylist effort, including observations of promotional materials, whether the stylist was keeping records of sales, and subjective assessments of stylist interest and attention.

A census was conducted of all hair salons in Lusaka and a grid was imposed on the GPS-mapped locations of the salons to divide the city into equal geographical areas of 650m by 650m each. A buffer zone of 75 m on all sides of the grid cell was excluded, resulting in at least 150 m between salons in adjacent areas. The resulting areas, each measuring 250,000 m2, served as the unit of randomization. Salons located in buffer areas were not invited to join the program. The final sample for randomization consists of 205 distinct neighborhoods, containing 1222 hair salons, all of whom were invited to join the training. To prevent spillover effects, agents in the same neighborhood were assigned to the same treatment and salons neighbors are either in the same treatment or not part of the program.


Invitation to attend the training was extended to all 1222 stylist of whom 747 ultimately became agents. Attendees were allocated to one of four intervention groups - no reward, 10% margin, 90% margin, and non-financial (stars and thermometer display). Thereafter, dispensers or single packs could be purchased either during a monthly restocking visit by SFH representatives or by calling a toll-free number dedicated to the female condom program.

To elicit an incentive-compatible measure of pro-social motivation toward HIV causes, a dictator game was implemented during the training program. Agents were told that, in addition to the training show-up fee (40,000 ZMK), each of them would receive 12,500 ZMK, which they could keep for themselves or donate, in part or in full, to a well known charity in Lusaka that provides care to HIV/AIDS patients. The amount donated is taken as a proxy for the agents' motivation for the cause. Since this is likely to be correlated with the agents' wealth, it is always used together with asset- and socio-economic-status measures in the analysis that follows.

Finally, given the non-financial treatment with its public display of thermometer and stars differs from the other three treatment conditions in that the customers do not that the stylists are being rewarded or their level of condom sales performance, a placebo star treatment is given to the control group in a later round. The thermometer looks the same as that of the actual treatment group but the number of stars reflect average sales by all salons, rather than the individual salon sales.

Minmax t-stat approach, balanced on salon type (hairdresser or barber); salon size (proxied by the number of employees); whether the salon is located near a bar (a proxy for condom demand); the number of salons in the same cell; the agents’ total assets; whether the agent reports giving to charitable causes; and whether the agent sells other products in their salon

Grid cells (geographical area).

Yes

205 grid cells

771 agents

No reward (control): 44 cells
10% margin reward: 42 cells
90% margin reward: 44 cells
Non-financial reward: 43 cells

NO MARGIN, NO MISSION? A FIELD EXPERIMENT ON INCENTIVES FOR PUBLIC SERVICE DELIVERY

We conduct a field experiment to evaluate the effect of extrinsic rewards, both financial and non-financial, on the performance of agents recruited by a public health organization to promote HIV prevention and sell condoms. In this setting: (i) non-financial rewards are effective at improving performance; (ii) the effect of both types of rewards is stronger for pro-socially motivated agents; and (iii) both types of rewards are effective when their relative value is high. The findings illustrate that extrinsic rewards can improve the performance of agents engaged in public service delivery, and that non-financial rewards can be effective in settings where the power of financial incentives is limited.

Ashraf, Nava, Oriana Bandiera, and Kelsey Jack. 2014. "No Margin, No Mission? A Field Experiment on Incentives for Public Service Delivery.” Journal of Public Economics 120: 1-17.

https://www.povertyactionlab.org/sites/default/files/publications/205_216%20No%20Margin%20No%20Mission%20Dec2014.pdf