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Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial

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  • Jessica Cohen
  • Pascaline Dupas
  • Simone G. Schaner

Abstract

Both under- and over-treatment of communicable diseases are public bads. But efforts to decrease one run the risk of increasing the other. Using rich experimental data on household treatment-seeking behavior in Kenya, we study the implications of this tradeoff for subsidizing life-saving antimalarials sold over-the-counter at retail drug outlets. We show that a very high subsidy (such as the one under consideration by the international community) dramatically increases access, but nearly half of subsidized pills go to patients without malaria. We study two ways to better target subsidized drugs: reducing the subsidy level and introducing rapid malaria tests over-the-counter.

Suggested Citation

  • Jessica Cohen & Pascaline Dupas & Simone G. Schaner, 2012. "Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial," NBER Working Papers 17943, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17943
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    References listed on IDEAS

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    1. Jessica Cohen & Pascaline Dupas, 2008. "Free Distribution or Cost-Sharing? Evidence from a Malaria Prevention Experiment," NBER Working Papers 14406, National Bureau of Economic Research, Inc.
    2. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
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    6. Achyuta Adhvaryu, 2011. "Learning, Misallocation, and Technology Adoption: Evidence from New Malaria Therapy in Tanzania," Working Papers 1000, Economic Growth Center, Yale University.
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    11. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 1-45.
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    16. Jessica L. Cohen & William T. Dickens, 2012. "Adoption of Over-the-Counter Malaria Diagnostics in Africa: The Role of Subsidies, Beliefs, Externalities, and Competition," Springer Books, in: Ramanan Laxminarayan & Molly K. Macauley (ed.), The Value of Information, edition 127, chapter 0, pages 173-191, Springer.
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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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