Do Non-Monetary Prices Target the Poor? Evidence from a Field Experiment in India

Abstract

This paper uses willingness to pay (WTP) data from a field experiment in Hyderabad, India in 2013 to determine whether non-monetary prices better target health products to the poor than monetary prices. Monetary WTP is increasing in income and non-monetary WTP is weakly decreasing in income. Household fixed effects in a pooled sample of monetary WTP and non-monetary WTP are used to compare the correlation of income and WTP across price types. It is found that non-monetary WTP falls relative to monetary WTP as income rises. Finally, a greater fraction of demand is comprised of the poor at non-monetary prices.

Keywords: Non-monetary price, Ordeal mechanism, Targeting, Subsidies

JEL Classification: C93, D61, H42, I14, I15, O12