Research Article

Targeting health subsidies through a nonprice mechanism: A randomized controlled trial in Kenya

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Science  26 Aug 2016:
Vol. 353, Issue 6302, pp. 889-895
DOI: 10.1126/science.aaf6288

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Delivering chlorine to those who use it

In developed countries, a consumer's valuation of a health product can be measured by his or her willingness to pay for it. But poorer individuals, especially those in developing countries, might want and need a product yet be unable to pay for it with money. Dupas et al. demonstrate that a nonprice voucher mechanism can be used to deliver chlorine for water treatment to people in Kenya who are too poor to pay for it, but who use it when they get it (see the Perspective by Olken). Having to redeem the vouchers screens out people who would accept the free chlorine solution but not use it.

Science, this issue p. 889; see also p. 864

Abstract

Free provision of preventive health products can markedly increase access in low-income countries. A cost concern about free provision is that some recipients may not use the product, wasting resources (overinclusion). Yet, charging a price to screen out nonusers may screen out poor people who need and would use the product (overexclusion). We report on a randomized controlled trial of a screening mechanism that combines the free provision of chlorine solution for water treatment with a small nonmonetary cost (household vouchers that need to be redeemed monthly in order). Relative to a nonvoucher free distribution program, this mechanism reduces the quantity of chlorine procured by 60 percentage points, but reduces the share of households whose stored water tests positive for chlorine residual by only one percentage point, substantially improving the trade-off between overinclusion and overexclusion.

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