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Do the prices of a preventive animal health product affect dairy farmers’ willingness to pay and product use? Evidence from an experimental study

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  • Cariappa, A.G. Adeeth
  • Chandel, B.S.
  • Sendhil, R.
  • Dixit, Anil Kumar
  • Sankhala, Gopal
  • Mani, Veena
  • Meena, B.S.

Abstract

Should we distribute preventive animal health products for free or charge a positive price? The decision depends on the price sensitivity of the product and the effect prices have on product use. We explore this idea through a field experiment in which we randomize the price a farmer faces for an animal health product. We find that the demand for the product is highly sensitive to offer prices; willingness to pay (WTP) decreased from 44% at ₹ 100 to 18% at ₹ 500. Further, among farmers who were willing to pay, the product usage rate was 71% and usage did not increase in offer prices (lack of screening effect). Furthermore, we find that farmers whose animals were sick in the baseline had a higher WTP. These findings support the human capital model relating to demand for human health products. We argue that individuals behave in a similar way when the decisions concern their own health or the health of an animal they rear for commercial purposes. A highly subsidized distribution of the product is recommended due to high price sensitivity, lack of screening effect, equitable distribution among poor and lesser implementation costs found in this study.

Suggested Citation

  • Cariappa, A.G. Adeeth & Chandel, B.S. & Sendhil, R. & Dixit, Anil Kumar & Sankhala, Gopal & Mani, Veena & Meena, B.S., 2022. "Do the prices of a preventive animal health product affect dairy farmers’ willingness to pay and product use? Evidence from an experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    • Handle: RePEc:eee:soceco:v:100:y:2022:i:c:s2214804322000970
    DOI: 10.1016/j.socec.2022.101925
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