This article reports on the quality of care delivered by private and public providers of primary health care services in rural and urban India. To measure quality, the study used standardized patients recruited from the local community and trained to present consistent cases of illness to providers. We found low overall levels of medical training among health care providers; in rural Madhya Pradesh, for example, 67 percent of health care providers who were sampled reported no medical qualifications at all. What’s more, we found only small differences between trained and untrained doctors in such areas as adherence to clinical checklists. Correct diagnoses were rare, incorrect treatments were widely prescribed, and adherence to clinical checklists was higher in private than in public clinics. Our results suggest an urgent need to measure the quality of health care services systematically and to improve the quality of medical education and continuing education programs, among other policy changes.

We present unique audit-study evidence on health care quality in rural India, and find that most private providers lacked medical qualifications, but completed more checklist items than public providers and recommended correct treatments equally often. Among doctors with public and private practices, all quality metrics were higher in their private clinics. Market prices are positively correlated with checklist completion and correct treatment, but also with unnecessary treatments. However, public sector salaries are uncorrelated with quality. A simple model helps interpret our findings: Where public-sector effort is low, the benefits of higher diagnostic effort among private providers may outweigh costs of potential overtreatment. (JEL H42, I11, I18, O15)

Across a range of contexts, reductions in education costs and provision of subsidies can boost school participation, often dramatically. Decisions to attend school seem subject to peer effects and time-inconsistent preferences. Merit scholarships, school health programs, and information about returns to education can all cost-effectively spur school participation. However, distortions in education systems, such as weak teacher incentives and elite-oriented curricula, undermine learning in school and much of the impact of increasing existing educational spending. Pedagogical innovations designed to address these distortions (such as technology-assisted instruction, remedial education, and tracking by achievement) can raise test scores at a low cost. Merely informing parents about school conditions seems insufficient to improve teacher incentives, and evidence on merit pay is mixed, but hiring teachers locally on short-term contracts can save money and improve educational outcomes. School vouchers can cost-effectively increase both school participation and learning.

The relative return to strategies that augment inputs versus those that reduce inefficiencies remains a key open question for education policy in low-income countries. Using a new nationally-representative panel dataset of schools across 1297 villages in India, we show that the large public investments in education over the past decade have led to substantial improvements in input-based measures of school quality, but only a modest reduction in inefficiency as measured by teacher absence. In our data, 23.6% of teachers were absent during unannounced school visits, and we estimate that the salary cost of unauthorized teacher absence is $1.5 billion/year. We find two robust correlations in the nationally-representative panel data that corroborate findings from smaller-scale experiments. First, reductions in student-teacher ratios are correlated with increased teacher absence. Second, increases in the frequency of school monitoring are strongly correlated with lower teacher absence. Using these results, we show that reducing inefficiencies by increasing the frequency of monitoring could be over ten times more cost effective at increasing the effective student-teacher ratio than hiring more teachers. Thus, policies that decrease the inefficiency of public education spending are likely to yield substantially higher marginal returns than those that augment inputs.

We present the first direct evidence on the relative quality of public and private healthcare in a lowincome setting, using a unique set of audit studies. We sent standardized (fake) patients to rural primary care providers in the Indian state of Madhya Pradesh, and recorded the quality of care provided and prices charged in each interaction. We report three main findings. First, most private providers lacked formal medical training, but they spent more time with patients and completed more essential checklist items than public providers, and were equally likely to provide a correct treatment. Second, we compare the performance of qualified public doctors across their public and private practices, and find that the same doctors exerted higher effort and were more likely to provide a correct treatment in their private practices. Third, in the private sector, we find that prices charged are positively correlated with provider effort and correct treatment, but also with unnecessary treatments. In the public sector, we find no correlation between provider salaries and any measure of quality. We develop a simple theoretical framework to interpret our results and show that in settings with low levels of effort in the public sector, the benefits of higher diagnostic effort in the private sector may outweigh the costs of market incentives to over treat. These differences in provider effort may partly explain the dominant market share of fee-charging private providers even in the presence of a system of free public healthcare.

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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