Micro-Loans, Insecticide-Treated Bednets, and Malaria: Evidence from a Randomized Controlled Trial in Orissa, India

Abstract

We describe findings from the first large-scale cluster randomized controlled trial in a developing country that evaluates the uptake of a health-protecting technology, insecticide-treated bednets (ITNs), through micro-consumer loans, as compared to free distribution and control conditions. Despite a relatively high price, 52 percent of sample households purchased ITNs, highlighting the role of liquidity constraints in explaining earlier low adoption rates. We find mixed evidence of improvements in malaria indices. We interpret the results and their implications within the debate about cost sharing, sustainability and liquidity constraints in public health initiatives in developing countries.

Short-Run Subsidies and Long-Run Adoption of New Health Products: Evidence From a Field Experiment

“…9 The result that initial adoption is very sensitive to price is consistent with the result obtained among pregnant women by Cohen and Dupas (2010), in a separate study also in Western Kenya. It is also consistent with the results in Tarozzi et al (2013), who found that regular bed net coverage in Orissa (India) decreases from 51% to 10% when the price increases from free to full.…”

“…First, given the infectious nature of the diseases they prevent, most of these products generate positive health externalities, and without a subsidy private investment in them is socially suboptimal. Second, when the majority of the population is poor and credit-constrained, subsidies may be needed to ensure widespread access (Cohen and Dupas (2010), Tarozzi, Mahajan, Blackburn, Kopf, Krishnan, and Yoong (2013)).…”

Social benefits of government investment in enterprises

“…This paper is connected to the product or technology adoption puzzle, since the main purpose of our work is to help governments achieve the goal of increasing market consumption (ie, consumer surplus) and firms' profits. In the literature, many studies have attempted to explain the adoption puzzle from the perspective of consumers (ie, demand side, see Cole et al, 2013;Duflo, Kremer, & Robinson, 2011;Giné & Yang, 2009;Tarozzi et al, 2014) and distributors (ie, supply side, see Fuchs, Green, & Levine, 2017). In the operations management literature, in order to effectively enhance social welfare, several studies have focused on offering subsidies and rebates (eg Babich, Lobel, & Yucel, 2017;Cohen et al, 2015;Levi et al, 2016Levi et al, , 2019Raz & Ovchinnikov, 2015).…”

Using an economic experiment to estimate willingness‐to‐pay for a new maternal nutrient supplement in Ghana

“…Tarozzi et al. (), for example, found that household ownership of bednets increased significantly over a one‐year period in India among villages that had been offered the option of purchasing bednets on credit, and using randomized cash payouts, Meredith et al. () found evidence suggesting liquidity was an important consideration in a household's decision to purchase rubber soled shoes to prevent hookworm in children.…”