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Discussion Papers

Do Nonmonetary Prices Target the Poor? Evidence from a Field Experiment in India


CODE: IDB-DP-456
AUTHOR(s): Hoffmann, Bridget
PUBLISHED: May 2016
LANGUAGE: English
RELATED TOPICS: Microeconomics
DOWNLOAD FILE IN: English

Abstract:

Monetary price subsidies are often used to increase take-up of health products, but monetary prices may screen out those with the highest returns, the poor. Using willingness to pay (WTP) data from a field experiment in India, this paper determines whether nonmonetary prices better target health products to the poor than monetary prices. It is found that monetary WTP is increasing in income and nonmonetary WTP is weakly decreasing in income. Comparing across price types, nonmonetary WTP falls relative to monetary WTP as income rises. Nonmonetary prices better target the poor than monetary prices (a larger fraction of total demand is poor).

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