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To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda

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  • McConnell, Margaret
  • Karlan, Dean
  • Fischer, Greg
  • Raffler, Pia

Abstract

In a field experiment in Uganda, a free distribution of three health products lowers subsequent demand relative to a sale distribution. This contrasts with work on insecticide-treated bed nets, highlighting the importance of product characteristics in determining pricing policy. We put forward a model to illustrate the potential tension between two of these important factors, learning and anchoring, and then test this model with three products selected specifically for their variation in the scope for learning. We find the rank order of percentage change of shifts in demand matches theoretical predictions, although the differences are not statistically significant, and only two of three pairwise comparisons match when the reductions are specified in percent terms. These results highlight the importance of understanding pricing policy with respect to product, market, and household characteristics.

Suggested Citation

  • McConnell, Margaret & Karlan, Dean & Fischer, Greg & Raffler, Pia, 2014. "To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda," CEPR Discussion Papers 9999, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9999
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    2. Gunther Bensch & Jörg Peters, 2020. "One‐Off Subsidies and Long‐Run Adoption—Experimental Evidence on Improved Cooking Stoves in Senegal," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 72-90, January.
    3. Paulina Oliva & B. Kelsey Jack & Samuel Bell & Elizabeth Mettetal & Christopher Severen, 2020. "Technology Adoption under Uncertainty: Take-Up and Subsequent Investment in Zambia," The Review of Economics and Statistics, MIT Press, vol. 102(3), pages 617-632, July.
    4. Takahashi, Kazushi & Ikegami, Munenobu & Sheahan, Megan & Barrett, Christopher B., 2014. "Quasi-experimental evidence on the drivers of index-based livestock insurance demand in Southern Ethiopia," IDE Discussion Papers 480, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Grimm, Michael & Hartwig, Renate, 2018. "Unblurring the Market for Vision Correction: A Willingness to Pay Experiment in Rural Burkina Faso," IZA Discussion Papers 11929, Institute of Labor Economics (IZA).
    6. Camille Boudot‐Reddy & Anita Mukherjee, 2021. "Improving the adoption of household health products: A sales experiment with chlorine tablets," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 623-641, March.
    7. Anja Sautmann & Samuel Brown & Mark Dean, 2016. "Subsidies, Information, and the Timing of Childrenís Health Care in Mali," Working Papers 2016-2, Brown University, Department of Economics.
    8. Hongyu Guan & Huan Wang & Juerong Huang & Kang Du & Jin Zhao & Matthew Boswell & Yaojiang Shi & Mony Iyer & Scott Rozelle, 2018. "Health Seeking Behavior among Rural Left-Behind Children: Evidence from Shaanxi and Gansu Provinces in China," IJERPH, MDPI, vol. 15(5), pages 1-19, April.
    9. Guan, Hongyu & Zhao, Jin & Liu, Wenting & Shi, Yaojiang, 2023. "Impact of subsidized distribution on follow-up uptake of vision health services for rural students: A field experiment in China," Journal of Asian Economics, Elsevier, vol. 89(C).
    10. Wang, H. & Guan, H. & Boswell, M., 2018. "Health Seeking Behavior among Rural Left-behind Children: Evidence from a Randomized Controlled Trial in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276955, International Association of Agricultural Economists.
    11. Pascaline Dupas & Edward Miguel, 2016. "Impacts and Determinants of Health Levels in Low-Income Countries," NBER Working Papers 22235, National Bureau of Economic Research, Inc.
    12. Sean Sylvia & Xiaochen Ma & Yaojiang Shi & Scott Rozelle & C. -Y. Cynthia Lin Lawell, 2018. "Ordeal Mechanisms, Information, and the Cost-Effectiveness of Subsidies: Evidence from Subsidized Eyeglasses in Rural China," Papers 1812.00383, arXiv.org.

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    More about this item

    Keywords

    Health; Learning; Pricing; Subsidies;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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