Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment

42 Pages Posted: 3 Jan 2008 Last revised: 22 Mar 2008

See all articles by Jessica Cohen

Jessica Cohen

The Brookings Institution

Pascaline Dupas

Dartmouth College - Department of Economics

Date Written: December 2007

Abstract

It is widely believed 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 in the context of a field experiment in Kenya, in which we randomized the price at which pregnant women could buy long lasting anti-malarial insecticide-treated nets (ITNs) at prenatal clinics. We find no evidence that cost-sharing reduces wastage on those that 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 cost-sharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the prenatal clients in the control group in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by 75 percent when the price of ITNs increases from 0 to $0.75, the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of ITN prices on infant mortality that incorporates both private and social returns to ITN usage. Overall, given the large positive externality associated with widespread usage of insecticide-treated nets, our results suggest that free distribution to pregnant women is both more effective and more cost-effective than cost-sharing.

Keywords: health care, global health, global economics, economic development, malaria, cost-sharing, malaria treatment

Suggested Citation

Cohen, Jessica and Dupas, Pascaline, Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment (December 2007). Brookings Global Economy and Development Working Paper No. 11. Available at SSRN: https://ssrn.com/abstract=1080301 or http://dx.doi.org/10.2139/ssrn.1080301

Jessica Cohen (Contact Author)

The Brookings Institution ( email )

1775 Massachusetts Ave., NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/cohenj.aspx

Pascaline Dupas

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

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