The following is a short description of a few research projects that are currently being supported by the working group.
Assistant Professor Pascaline Dupas (joint with Jessica Cohen at the Brookings Institution)
Timeline of Project: Approximately 18 months
Malaria ranks among the foremost health problems in tropical countries. It is estimated that malaria alone kills a million people every year, and reduces GDP per capita growth rates by at least a quarter of a percentage point per year. A key challenge to the control of malaria is the development of parasite resistance to new drugs within a decade of their introduction. An important driver of resistance development is over-diagnosis of malaria. Household with a fever typically presume they have malaria and purchase an anti-malarial for the pharmacy or get presumptively treated for malaria at the health center. But fever alone is a poor indicator of malaria infection, and recent survey data has revealed very high rates of over-treatment with anti-malarials. In addition to speeding the emergence of resistant strains, high rates of inappropriate treatment with anti-malarials is problematic because it delays proper diagnosis and treatment for the true cause of illness, and it wastes precious resources as large subsidies for anti-malarial treatment are wasted on individuals whose sickness is not caused by malaria.
In response to widespread resistance to older anti-malarials, such as Chloroquine, the global health community is working to make new, more effective malaria treatments called Artemisinin Combination Therapies (ACTs) available to the poor through heavy subsidies. Highly-subsidized ACTs will surely go a long way toward reducing malaria-induced mortality and morbidity. However, lower-priced ACTs are also likely to increase the number of non-malarial fevers being treated with ACTs, accelerating resistance to these new medicines. There is thus an apparent tension between making ACTs affordable to the most vulnerable and guarding against the emergence of ACT-resistant malaria. This project explores ways to achieve both of these objectives through focused targeting of the subsidy toward those with diagnosed malaria. This is done by making subsidized rapid diagnostic tests (RDTs) for malaria available in pharmacies and—through strategic pricing of the ACTs and RDTs being sold together—creating a financial incentive for individuals to learn their malaria status.
Our focus on incentives stems from the following basic premise: most people would prefer not to pay for ACTs if they don’t actually have malaria. Purchasing a cheap RDT—so as not to waste money on malaria medicine and delay proper treatment—is usually in one’s self-interest. This project will experiment with different ACT-RDT “price bundles.” In each case, the cost of the RDT will be less than the ACT and the price of the ACT for malaria-positive people will be lower than that for malaria-negative people. Take, for example, the case in which the RDT costs $.10 and the ACT costs $.15 if the test is positive and $.35 if the test is negative (or if the person does not get tested). For those who intend to buy the ACT, this creates an incentive to be tested for malaria since individuals who test negative can avoid spending money on an ACT (paying $.10 instead of the cost of the ACT) and those who test positive pay less than they would have paid if they did not get tested ($.25 rather than $.35).
The experimental design will allow for a rigorous side-by-side comparison of a universal ACT subsidy policy to one in which subsidized RDTs are sold alongside ACTs in pharmacies. We will compare the merits of both policies on the basis of how successfully they maintain affordability while reducing over-treatment. A secondary goal is to analyze whether the combined ACT-RDT subsidy policy can enhance efficiency. Specifically, if RDTs are successful at discouraging ACT consumption by malaria-negative individuals, then the resources that would have been spent subsidizing unnecessary ACTs can be shifted to funding subsidized RDTs, rendering the combined ACT-RDT policy cost-neutral.
The risk of losing yet another malaria medicine to resistance fueled by over-diagnosis, and the concomitant costs of over-diagnosis on treatment delays and wasted foreign aid, lend urgency to the need to experiment with superior methods of targeting ACT subsidies. This project seeks to bring rigorous analysis of straightforward, incentive-based and possibly cost-neutral methods of improving malaria diagnosis and treatment to policy-makers struggling to fight back against the continuing burden of malaria.
Robert Jensen (with Nolan Miller, Harvard Kennedy School)
Timeline of Project: Approximately 3-5 years
Many developing countries and international organizations recognize the importance of enacting policies that promote healthy nutrition among its population. A common way of doing this is to use food price subsidies or price controls on healthier, more nutritious foods to protect or improve the nutrition of the poor. The use of these programs has increased dramatically in response to recent, sharp increases in world food prices.
The problem with these policies is that the behavior of utility maximizing households may undermine or negate the need for such policies being enacted in the first place. For example, while it may seem like an obvious assumption that subsidizing the price of certain nutritious foods will improve overall nutrition, the prediction from this theory is unproven. Consumers value the non-nutritional attributes of food in addition to the nutritional attributes, so the net nutritional consequences of a subsidy will depend on how consumers substitute among foods.
The poorest households in many low income countries often spend a large share of their budget on, and receive most of their nutrition from, staple foods such as rice, wheat, or maize. When subsidies are applied to these foods, they in effect make households wealthier in terms of purchasing power. As a result, they may switch away from these nutritious staples, which are commonly viewed as inferior goods, and instead buy more “luxury” foods (such as meat) that offer more taste or that add variety to the diet but are more costly sources of nutrients. If this substitution is substantial enough, consumers may weaken or potentially even reverse the intended nutritional impact of the subsidy.
Using panel data from China, we explore the connection between income, prices, and nutritional status in a series of papers, including: studying the impact of food price subsidies on nutrition; understanding the nutritional impact of the recent increase in world food prices; and constructing new measures of poverty and welfare taking consumer choice into consideration.
Adriana Lleras-Muney (joint with Seema Jayachandran at Stanford University)
Timeline of Project: Approximately 3-5 years
Most countries of the world today have experienced (or are in the process of experiencing) what is known as the demographic transition, namely a shift from a regime where mortality and fertility rates are high, to a regime with low mortality and fertility rates. Typically mortality falls first and it is then followed by a subsequent decline in fertility. Although this description is widely accepted as appropriately fitting the experiences of most countries, many controversies remain about how to explain these patterns.
One popular theory posits that technological progress first lead to a decline in infant and child mortality, which in turn then led to a decline in fertility. This theory assumes that households want to ensure a certain number of surviving offspring, and so they must have a large number of births when infant mortality is high, but can afford to have only a few births once infant mortality falls. Other theories of the demand for children also imply that changes in infant mortality will affect household’s reproductive choices. However to date, there is no data available to assess whether households are indeed aware of what infant mortality rates are and the extent to which their behavior changes as a result. Existing evidence relates infant mortality rates computed from vital statistics to fertility rates.
To better understand household beliefs and behavior, we are collecting subjective infant mortality expectations from a large representative sample of households in Ghana, in addition to information on their past and expected fertility behavior. These unique data (no other data are publicly available that contain these subjective expectations) will allow us to determine how accurate household beliefs are (when compared to population statistics), whether subjective expectations vary with known determinants of infant mortality (for example whether households expect probability of a first birth to be higher than that of second order births), and whether subjective expectations predict fertility choices as theory suggests.