DP8976 Do Public Health Interventions Crowd Out Private Health Investments? Malaria Control Policies in Eritrea

Author(s): Pedro Carneiro, Tewolde Ghebremeskel, Joseph Keating, Andrea Locatelli
Publication Date: May 2012
Keyword(s): Crowding-Out, Development, Health, Malaria
JEL(s): I10
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8976

It is often argued that engaging in indoor residual spraying (IRS) in areas with high coverage of mosquito bed nets may discourage net ownership and use. This is just a case of a public program inducing perverse incentives. We analyze new data from a randomized control trial conducted in Eritrea which surprisingly shows the opposite: IRS encouraged net acquisition and use. Our evidence points to the role of imperfect information. The introduction of IRS may have made the problem of malaria more salient, leading to a change in beliefs about its importance and to an increase in private health investments.