On Wednesday, January 9th, CGD hosted Brookings Institution Research Fellow Jessica Cohen for a talk on "Free Distribution vs. Cost-Sharing: Evidence from a Malaria-Prevention Field Experiment in Kenya." Mead Over, Senior Fellow, Center for Global Development, served as a discussant and Michael Clemens, Research Fellow, Center for Global Development, moderated the discussion.
Download Jessica Cohen's presentation (pdf, 120k)
Read Jessica Cohen's paper (pdf, 459k)
Download Mead Over's presentation (pdf, 1002k)
It is widely believed that cost-sharing--charging a subsidized, positive price--for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument in the context of a field experiment in Kenya, in which we randomized the price at which pregnant women could buy long lasting anti-malarial insecticide treated nets (ITNs) at prenatal clinics. We find no evidence that cost-sharing reduces wastage on those that will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that cost-sharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the prenatal clients in the control group in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by 75 percent when the price of ITNs increases from zero to $0.75, the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of ITN prices on infant mortality that incorporates both private and social returns to ITN usage. Overall, given the large positive externality associated with widespread usage of insecticide-treated nets, our results suggest that free distribution is both more effective and more cost-effective than cost-sharing.