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Health-related Behavior and Cost-effectiveness of Delivery Mechanisms of Health Products in Poor Economies: Structural and Experimental Evidence from Insecticide-treated bednets in Orissa (India)

Final Report Summary - HEALTHBEHAVIORINLDCS (Health-related Behavior and Cost-effectiveness of Delivery Mechanisms of Health Products in Poor Economies: Structural and Experimental Evidence from Insecticide-treated bednets in Orissa (India))

This inter-disciplinary project adopted experimental and structural methodologies to study (1) sustainability and impacts of mechanisms to deliver health-protecting technologies to poor populations in developing countries; (2) methodological advances to understand health-related decision-making and behavior in such populations. The specific empirical framework is the uptake, usage and impacts on malaria indices of insecticide-treated bednets (ITNs) in rural Orissa (India). Component (1) has four specific aims. First, evaluate to what extent consumer loans increased ITN ownership and usage in a cost-effective way, using data from the first randomized controlled trial where health-protecting technologies were provided at full cost but on credit, as compared to control conditions or free distribution. Second, evaluate the impacts of the alternative delivery mechanisms on clinically measured malaria indices. Third, contribute to a new literature that analyzes to what extent the fact itself of being surveyed can change behavior, possibly confounding the impact evaluation of policies. Fourth, evaluate the nature and extent of spillovers of the interventions on non-beneficiary households. Component (2) of the project is more theoretical and adopted a dynamic discrete choice structural approach, adding novel identification results, to gauge whether preferences that are present-biased matter, in the study population, when households make decisions that may affect health in important ways.
The researcher and his coauthors have implemented a RCT to argue that micro-consumer loans may provide a feasible and cost-effective method to increase adoption in situations where existing markets and public health interventions have not been successful at ensuring adequate coverage of ITNs, which are one of the most efficacious malaria prevention methods. In a treatment arm composed of 47 villages in rural Orissa (India), our program succeeded in selling about 1,100 ITNs on credit to clients of a micro-lender over a few months, despite the relatively high price of the ITNs. Such purchase rates (52% of sample households bought ITNs) are substantially higher than in earlier studies that found very low cash purchases of health products among the poor, despite heavy subsidization. Sales on credit reduced the estimated cost of reaching household at higher malaria risk by about 50% relative to free distribution. However, these factors must be weighted against the lower product coverage (because not everyone buys) achievable with cost-sharing relative to free distribution. Such factor is likely very important for preventive products such as ITNs that not only protect the user but also benefit surrounding non-users through externalities. Impacts on malaria indices were mixed. First, we find no evidence of substantial improvements in malaria or anemia prevalence, measured from blood samples. In contrast, we find substantial and statistically significant improvements in self-diagnosed malaria incidence (the number of cases over a period of time) in areas where nets were either donated or sold on credit. To reconcile these results we go back to the numerous earlier field trials of ITN efficacy and to accepted epidemiological models of malaria transmission. We conclude that the relatively low health benefits found in our study areas were due to the low fraction of beneficiaries relative to the total population and to low usage rates of the bednets. The research also finds limited evidence that behavior in control areas was substantively affected by the presence of the study. A separate paper in preparation for submission analyzes whether social links to households that received ITNs for free from the intervention increased the probability of ITN ownership and usage among households that lived in the same areas but did not benefit directly from the program. We find limited evidence that such diffusion of health-protecting behavior took place. The researcher is also close to the completion of Component 2. This research has let to the formulation of a model of behavior among economic agents that consider investment in preventive health but are hindered by 'present bias' (temptations). The research discuss conditions under which the extent of such present-bias can be estimated from the data even allowing for different 'types' of individuals in the study area. The empirical analysis uses data from the RCT in Orissa to show that a large fraction of households are affected by present-bias although most are only to a limited extent.
The research has already led to a major publication in the American Economic Review and an invitation to revise and resubmit another paper in another major economic journal (Econometrica). These articles have already attracted more than 70 Google Scholar citations. The third paper resulting from the project should be submitted soon to a field journal. The results of the RCT are important for health policy as they show that cost sharing coupled with micro-loans may help in situations where universal free distribution is not possible or not desirable. Also, the low coverage and irregular usage found in our study areas are likely to mimic more closely the result of actual public health interventions ("effectiveness") than studies carried out under ideal trial conditions ("efficacy"). The results should also be of relevance for the public health literature, given that almost all previous studies are efficacy trials. The unique features of the RCT thus complement the existing literature and suggest that public health interventions which only achieve the distribution of a relatively limited number of ITNs and/or do not ensure regular usage may fail to achieve the desired effects. The results of Component 2 are also likely to have an important impact in the literature. First, the importance of 'present-bias' is very difficult to identify and estimate using standard methods and data, and very little is known about the prevalence of the phenomenon among the poor in developing countries. The research shows rigorously conditions under which identification and estimation are possible, and estimates suggest that present-bias is not a major explanation for why preventive health products such as ITNs are not more commonplace in the study area.