Vouchers help get health goods to those most in need

Many organizations and governments charge a price even for heavily subsidized goods, like deworming medication and mosquito nets, in an effort to screen out those who would not use them; however, this approach can screen out people not just based on how much they will use the product, but also based on income.

Pascaline Dupas and colleagues sought to find an alternative way to eliminate wastage so that the very poor could still benefit. They tested three different ways of distributing chlorine water treatment solution, which can be used to decontaminate drinking water that causes life-threatening diarrhea.

The researchers recruited 1,118 people from waiting rooms of rural maternal and child health clinics in Kenya. One group was sold the treatment solution at a partially subsidized price; a second group was given the product freely; and, for a third group, the solution was given freely to those members who were willing to walk to a local shop to redeem a voucher every month.

Requiring households to redeem the vouchers every month reduced the amount of chlorine given out by 60 percentage points compared with the free distribution group, the researchers found.

Yet, the share of households actually using the chlorine fell by only 1 percentage point: 32.9% of households in the voucher group had water that tested positive for chlorine, the researchers found in follow-up studies, compared with 33.9% in the free distribution group.

The voucher system was also effective at screening out 88% of those who would accept the product under free provision but not treat their water.

The results of Dupas and colleagues suggest that vouchers can dramatically reduce wastage with only minor reductions in usage. These findings are discussed further in a Perspective by Benjamin Olken.