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

23 Pages Posted: 16 Jun 2022 Last revised: 9 Sep 2022

See all articles by Sarina Taheri

Sarina Taheri

Simon Fraser University (SFU), Department of Economics

Mohammad H. Rahmati

Sharif University of Technology

David A. Hyman

Georgetown University Law Center

Date Written: September 7, 2022


Iran has long had one of the highest rates of birth by Caesarean section (C-section) in the world. In 2014, the Iranian Ministry of Health and Medical Education (MHME) created substantial financial incentives discouraging the use of C-sections in public hospitals, by increasing physician payments and eliminating patient co-payments for vaginal deliveries. The MHME subsequently extended a modified version of the physician-level incentives (but not the patient-level incentives) to non-public hospitals. We use difference-in-differences (DiD) regression analysis to examine the impact of these reforms on the rate of C-sections and health outcomes in public and non-public hospitals. C-section rates in public hospitals declined by almost 5%, with higher reductions for 1st time mothers, and smaller reductions for mothers with clinical indications of higher-risk pregnancies (e.g., hypertension and diabetes). Physician-level incentives explain roughly two-thirds of the decline, and patient-level incentives explain most of the rest. The reform also resulted in improved outcomes, with fewer maternal deaths and NICU admissions – although we do find evidence of a modest increase in ICU admissions for mothers with diabetes. Our findings indicate that even large financial incentives have only modest effects on C-section rates. More aggressive strategies will be necessary to reduce C-section rates to the levels typically recommended by public health authorities.

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

Suggested Citation

Taheri, Sarina and Rahmati, Mohammad H. and Hyman, David A., The Impact of Large Financial Incentives on C-Section Rates: Evidence from Iran (September 7, 2022). Available at SSRN: or

Sarina Taheri

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

British Columbia

Mohammad H. Rahmati

Sharif University of Technology ( email )


David A. Hyman (Contact Author)

Georgetown University Law Center ( email )

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

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