The Impact of Substantial Financial Incentives on C-Section Rates: Evidence from Iran

24 Pages Posted: 16 Jun 2022 Last revised: 18 Jun 2024

See all articles by David A. Hyman

David A. Hyman

Georgetown University Law Center

Sarina Taheri

Simon Fraser University (SFU), Department of Economics

Mohammad H. Rahmati

Sharif University of Technology

Date Written: April 30, 2024


Delivery by Cesarean section (C-section) is necessary in 10-20% of births, but unnecessary C-sections result in elevated rates of maternal and infant morbidity and mortality and have high financial costs. For all of these reasons, excessive C-section rates have long been viewed as a serious public health problem. Iran has one of the highest rates of C-sections in the world, so reducing those rates (and the associated maternal and infant morbidity and mortality) has been an obvious public health priority. In 2014, the Iranian Ministry of Health and Medical Education created substantial financial incentives discouraging the use of C-sections in public hospitals, and it subsequently extended a modified version of these incentives to nonpublic hospitals. We examine the impact of these reforms on C-section frequency and health outcomes. C-section rates in Iranian public hospitals declined by almost 5%, with higher reductions for 1 st time mothers, and smaller reductions for mothers with higher-risk pregnancies (e.g., mothers with hypertension or diabetes). We contribute by using a difference-indifferences approach to show that physician-level financial incentives explain roughly two-thirds of the decline and patient-level financial incentives explain most of the rest. We also contribute by showing these reforms resulted in improved outcomes, with fewer maternal deaths and NICU admissions. Our findings indicate that economic incentives do affect C-section rates, but more aggressive strategies will be necessary to reduce C-section rates to the levels typically recommended by public health authorities (10%-20% of births).

Funding Information: With respect to funding, our research was funded by our respective academic institutions, and we received no external funding of any sort. Taheri was at Sharif University of Technology (She is now a student at Simon Fraser University, but they are not supporting the research.) Rahmati was/is at Sharif University of Technology. Hyman was/is at Georgetown University Law Center.

Declaration of Interests: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Keywords: Caesarean section rates, induced demand, monetary incentives, adverse health outcomes JEL classification: I12, I11, C81

JEL Classification: I12, I11, C81

Suggested Citation

Hyman, David A. and Taheri, Sarina and Rahmati, Mohammad H., The Impact of Substantial Financial Incentives on C-Section Rates: Evidence from Iran (April 30, 2024). Available at SSRN: or

David A. Hyman (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Sarina Taheri

Simon Fraser University (SFU), Department of Economics ( email )

British Columbia

Mohammad H. Rahmati

Sharif University of Technology ( email )


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