DP10690 Governance and the Effectiveness of Public Health Subsidies

Author(s): Rebecca Dizon-Ross, Pascaline Dupas, Jonathan Robinson
Publication Date: July 2015
Keyword(s): extortion, leakage, motivation, shirking
JEL(s): D73, H11, I15, I38
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10690

Heavily subsidizing essential health products through existing health infrastructure has the potential to substantially decrease child mortality in sub-Saharan Africa. There is, however, widespread concern that poor governance and in particular limited accountability among health workers seriously undermines the effectiveness of such programs. We performed innovative audits on bed net distribution programs in three countries (Ghana, Kenya and Uganda) to investigate local agency problems and their determinants in the allocation of targeted subsidies. Overall, agency concerns appear modest. Around 80% of the eligible receive the subsidy as intended and leakage to the ineligible appears limited, even when the ineligible have a high willingness to pay. The estimated level of mistargeting only modestly affects the cost-effectiveness of free distribution.