The Effect of Information and Subsidies on Chlorine Usage in Zambia

Households were offered a novel, unfamiliar water purification target product along with a familiar substitute product, which was sold at its regular market price. The price of the target product was varied from fully subsidized to no subsidy. Additionally, in"the informed treatment group" households were given detailed information about the similarity between the target product and the familiar product. Marketing scripts were pre-printed to reflect the 26 marketing conditions: informed vs. uninformed crossed with 13 different subsidy levels ranging from zero to full subsidy. The scripts were provided to marketers in random order and they were instructed to use them in that order.

2007-08-01

2007-09-30

Purchase of the target product

The outcome of interest was dissected into two parts: the amount of consumers' shift from the familiar product toward the target one, and the overall increase in demand for water purification.

This evaluation attempts to estimate the causal impact of information on the effectiveness of price subsidies using door-to-door marketing. A team of marketers visited households in low- to middle- income compounds in Lusaka with water purification products. The trial varied both how much information was provided to consumers and how much the product was subsidized. These two orthogonal sources of variation allow researchers to assess the complementarity between information and subsidies. After hearing the marketing intervention, subjects were asked whether they would like to purchase either product. After subjects completed their purchase decisions, marketers asked a brief set of survey questions including one on perceptions of the products' qualities.

Lack of street addresses and detailed maps made it infeasible to randomly choose participating households before arriving, so marketers were instructed to visit every fifth house along a street. If no one was home in the target house, they visited the house to the right, and if that also failed, then the house to the left, before counting another 5 houses along the street.

Households

Yes

487 households

487 observations

Either 18 or 19 observations were collected from each condition.

Does providing information about a product influence the impact of price subsidies on purchases? This questionisparticularly relevant for health products in developing countries where both informational campaigns and price subsidies are common policy instruments. We conduct a field experiment in Zambia and find that providing information about a new version of a product significantly increases the impact of price subsidies on take-up.

Ashraf, Nava, Kelsey Jack, and Emir Kamenica. 2013. "Information and Subsidies: Complements or Substitutes?" Journal of Economic Behavior Organization 88(2013): 133-139.

http://faculty.chicagobooth.edu/emir.kamenica/documents/infosubsidies.pdf