Free distribution or cost-sharing? Evidence from a randomized malaria prevention experiment.

The trial looks to understand two aspects of ITN subsidies: whether a higher price ticket affects demand and whether a higher price paid leads to greater usage due to psychological sunk cost effects. The intervention is a two-stage pricing targeted to pregnant women seeking prenatal care in rural clinics.

First stage: Sample clinics were randomly assigned to one of five price groups: Sixteen health clinics were randomly selected to receive ITNs at a subsidized rate, with the discount varying between clinics from 90-100 percent of market price, and four comparison clinics were provided no ITN distribution program.

Second stage: Within a given clinic, a further discount is randomly offered to women who have already chosen to buy the net. This second stage is intended to allow separate estimation of the selection and sunk cost effects of price on usage discussed above.

2007-03-01

2007-08-31

1) ITN uptake: how many participants choose to buy the ITN at offered price
2) ITN usage: self-reported and checked through unannounced home visits
3) Hemoglobin level (anemia status): Characteristic of clients selecting into buying ITN or not at any given price

1) ITN uptake: administrative records were kept by the clinic on ITN sales.

2) ITN usage: unannounced home visits were conducted with a randomly selected subsample of 246 women who had purchased ITNs. During the home visits, respondents were asked to show the net, whether they had started using it, and who was sleeping under it. Surveyors checked to see whether the net had been taken out of the packaging, whether it was hanging, and the condition of the net. During study rollout, clinic staff, enumerators or study participants were not informed that such visits would be conducted in order to ensure that usage was not unusually high due to Hawthorne effects.

3) Hb level: each clinic was visited three or four times on random days, and on those days enumerators surveyed all pregnant women who came for a prenatal visit. Women were asked basic background questions and whether they purchased a net, and their hemoglobin levels were recorded. In total, these measures were collected from 545 pregnant women.

Twenty rural clinics that provide prenatal services in the districts of Busia, Bungoma, Butere, and Mumias were chosen for the trial. Clinics were randomly assigned to either control or one of four different treatment arms. The treatment arms received a 90-100 percent subsidy on ITNs. Posters, announcing the price of the ITN were placed at the clinic and service providers were instructed to emphasize the importance of bed nets. Clinics were financially compensated for participation in the study.

For clinics where a positive price was charged, a second stage randomization took place. When a pregnant mother expressed interest to purchase a net at the price announced on the poster, she was offered a surprise lottery by picking up an envelope from a basket. The envelope contained the discount amount, if any. The lottery took place once a week, on varying weekdays, to avoid biasing the women’s decision on which day to visit the clinic.

To assign clinics to price groups, randomization was done in office by a computer
To assign surprise discount to women at the clinic if initial price was not 0, women drew a piece of paper from a bag.

Clinics.

However, there were three levels of randomization. First, clinics are randomized to be assigned to treatment and control groups. Within treatment groups, clinics are randomly assigned one of four price groups. Within a price group, patients entered a (unanticipated) lottery, once they agree to pay the price the clinic is charging for the ITN, to receive a discount ranging from 0% to a 100% (free).

Yes

20 clinics

Nets sales: 16 clinics; Baseline individual survey: 545 women; Follow up survey at home (purchased ITN): 246 women

Control: 4 clinics
Treatment (0 Ksh,100% clinics): 5 clinics
Treatment (10 Ksh, 97.5% subsidy): 5 clinics
Treatment (20 Ksh, 95.0 % subsidy): 3 clinics
Treatment (40 Ksh, 90.0% subsidy): 3 clinics

FREE DISTRIBUTION OR COST-SHARING? EVIDENCE FROM A RANDOMIZED MALARIA PREVENTION EXPERIMENT.

It is often argued that cost-sharing—charging a subsidized, positive price—for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prenatal clinics could sell long-lasting antimalarial insecticide-treated bed nets (ITNs) to pregnant women. We find no evidence that cost-sharing reduces wastage on those who will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that costs haring induces selection of women who need the net more: those who pay higher prices appear no sicker than the average prenatal client in the area in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by sixty percentage points when the price of ITNs increases from zero to $0.60 (i.e., from 100% to 90% subsidy), a price still $0.15 below the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of the impact of ITN prices on child mortality that incorporates both private and social returns to ITN usage. Overall, our results suggest that free distribution of ITNs could save many more lives than cost-sharing programs have achieved so far, and, given the large positive externality associated with widespread usage of ITNs, would likely do so at a lesser cost per life saved.

Cohen, Jessica, and Pascaline Dupas. 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment." The Quarterly Journal of Economics125(1): 1-45.

https://www.povertyactionlab.org/sites/default/files/publications/83%20Dupas%20QJE.pdf