Unblurring the Market for Vision Correction: A Willingness to Pay Experiment in Rural Burkina Faso

41 Pages Posted: 19 Nov 2018

See all articles by Michael Grimm

Michael Grimm

Erasmus University Rotterdam; University of Passau; IZA; DIW Berlin

Renate Hartwig

University of Passau

Abstract

We assess the willingness to pay (WTP) for eyeglasses in an adult population in rural Burkina Faso using a variant of the Becker-DeGroot-Marschak (BDM) method. We combine the BDM approach with video and deferred payment options to analyze the role of information and liquidity constraints. Furthermore, we exploit variation in reservation and transaction prices to study potential screening and sunk cost effects. Our main results show that, consistent with the over-exclusion perspective documented for essential health products, the willingness to pay for glasses is low, amounting to 20% of the current market price. Information provided through a video raises the willingness to pay for corrective glasses by 16%. In contrast, deferred payment does not affect the willingness to pay. Finally, we find no evidence of screening or sunk cost effects. Overall our results lend support to subsidization of eyeglasses in a resource poor setting.

Keywords: eyeglasses, information constraint, liquidity constraint, willingness to pay, Burkina Faso

JEL Classification: D11, D12, D83, I15

Suggested Citation

Grimm, Michael and Hartwig, Renate, Unblurring the Market for Vision Correction: A Willingness to Pay Experiment in Rural Burkina Faso. IZA Discussion Paper No. 11929. Available at SSRN: https://ssrn.com/abstract=3286189

Michael Grimm (Contact Author)

Erasmus University Rotterdam ( email )

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P.O. Box 29776
The Hague, 2502LT
Netherlands

HOME PAGE: http://www.iss.nl

University of Passau ( email )

Innstrasse 29
Passau, 94032
Germany

HOME PAGE: http://www.wiwi.uni-passau.de/grimm.html

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

DIW Berlin ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Renate Hartwig

University of Passau

Innstrasse 27
Passau, 94032
Germany

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