When Financial Incentives Backfire: Evidence From a Community Health Worker Experiment in Uganda

Zachary Wagner , RAND Corporation

There is growing support for an entrepreneurial community health worker (CHW) model, where CHWs charge for health products and retain the profits. Such a model is thought to improve CHW effort, which is often limited. We exploit experimental variation in whether CHWs in Uganda were instructed to sell ORS+zinc, highly effective but underused treatments for child diarrhea, or distribute ORS+zinc for free. This allows us to examine the impact of an entrepreneurial design on CHW performance. We find that, despite stronger financial incentives, the entrepreneurial model led to substantially less effort (fewer household visits). Qualitative evidence suggests that differential effort was driven by differences in social incentives; selling had a social penalty whereas free distribution was socially rewarding. Our results call into question the notion that an entrepreneurial model of health product distribution increases CHW motivation and provides further support for eliminating user fees for some products.

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 Presented in Session 196. Policies, Programs and Their Impacts on Health and Mortality