WORKING PAPERS

Incentives for health behaviors are an increasingly important policy tool in both developed and developing countries, and there is widespread interest in improving their effectiveness. However, different contracts are likely to be more effective for different people. Mechanism design offers two promising strategies to customize contracts--tagging on observables (i.e., 3rd-degree price discrimination), and offering a menu of contract choices (i.e., 2nd-degree price discrimination)--but a key concern with both is that participants with private information might self-select into contracts that are favorable to the agent but less effective from the perspective of the principal. We adapt each of these strategies to customize incentive contracts for walking. Using a randomized controlled trial among more than 5,000 adults in urban India, we show that both mechanisms increase physical activity, leading to a 60% increase in steps walked relative to the effect of a one-size-fits-all benchmark. Moreover, we find that the concern that participants will self-select into less effective contracts is not only misplaced, but exactly backwards. Instead, a common force in health behavior settings--commitment motives--leads agents to prefer more effective contracts under both mechanisms. In particular, sophisticated time inconsistent agents demand contracts that commit their future selves to walk more, bringing their preferences in partial alignment with the principal and improving the effectiveness of customization.

How should the design of incentives vary with agent time preferences? We develop two predictions. First, "bundling" the payment function over time – specifically by making the payment for future e↵ort increase in current effort – is more effective if individuals are impatient over effort. Second, increasing the frequency of payment is more effective if individuals are impatient over payment. We test the efficacy of time-bundling and payment frequency, and their interactions with impatience, using a randomized evaluation of an incentive program for exercise among diabetics in India. Consistent with our theoretical predictions, bundling payments over time meaningfully increases effort among the impatient relative to the patient. In contrast, increasing payment frequency has limited efficacy, suggesting limited impatience over payments. On average, incentives increase daily steps by 1,266 (13 minutes of brisk walking) and improve health.

Energy efficiency is a global priority, but investments in energy efficiency do not always deliver the expected benefits. This paper studies micro-irrigation systems (MIS), a technology thought to reduce the energy required for irrigation by as much as 70 percent. We installed individual meters to directly measure the energy consumption of several hundred farmers in Gujarat, India, and linked this meter data with survey data to yield a comprehensive view into energy use patterns in smallholder agriculture. We document two facts. One, energy use varies widely across farmers, and this variation is unexplained by factors such as farm area or village geography. Two, MIS users in our sample consume 30 to 40 percent more energy than nonusers of MIS. This difference does not apppear to be explained by observable differences across farmers nor by rebound effects, suggesting that the energy impacts of MIS under real-world conditions may be disappointing. While these findings are not causal, they highlight a need for increased attention to details of implementation and further research into the actual benefits of resource-conserving technologies.

PAYING FOR PREVENTION: THE ROLE OF INCENTIVES IN ELIMINATING CARE GAPS

An important aspect of the Affordable Care Act was an increased focus on quality-of-care. The act created new quality measures that emphasize closing gaps in care and decreasing the use of costly acute care through preventive services. While insurance providers now have substantial stake in encouraging their members to close preventive care gaps, there is limited evidence on the most effective means to do so. We conduct a randomized controlled trial among members of a large health insurance provider in a midwestern state who had one of seven critical care gaps in 2018. Members either receive a letter with an incentive to close their (or their child’s) care gap, a letter with information regarding the gap, or no letter. We find that while incentives are effective for encouraging closure of children and teens’ care gaps, the do not improve care gap closures for adults – and may even discourage gap closure among this population. Information regarding existing care gaps has no detectable effect on closures. 

Draft paper complete, please email for manuscript.

 

IN THE FIELD

MEASURING DEMAND FOR GROUNDWATER IRRIGATION: EXPERIMENTAL EVIDENCE FROM CONSERVATION PAYMENTS

With Nick Hagerty

We measure the price response of demand for groundwater and electricity in irrigated agriculture in Gujarat, India, where both resources are scarce and largely unregulated. To do so, we install meters and introduce a new program of payments for voluntary conservation through a randomized controlled trial. First, we use the price variation introduced by this program to estimate the price elasticity of groundwater demand, a key parameter required for efficient regulation by any means. Then, we evaluate conservation payments as a policy tool in itself. We measure treatment effects on water and energy consumption, as well as spillovers, mechanisms, and economic impacts. We also assess the program’s cost-effectiveness, testing whether there is opportunity for mutual gain between irrigators and electric utilities. This project will provide the first experimental evidence on groundwater pricing and among the first on conservation payments. Pilot evidence confirms that conservation payments are feasible and suggests large effects on water use. Baseline data collection is complete; the intervention is now paused due to the COVID-19 crisis but is set to launch upon resumption of India field operations.

ENCOURAGING ABSTINENCE BEHAVIOR IN AN OPIOID EPIDEMIC: INCENTIVIZING INPUTS AND OUTCOMES

With Rebecca Dizon-Ross and Mindy Waite

Combatting the rise of the opioid epidemic is a central challenge of U.S. health care policy. A promising approach for improving welfare and decreasing medical costs of people with substance abuse disorders is offering incentive payments for healthy behaviors. This approach, broadly known as "contingency management" in the medical literature, has repeatedly shown to be effective in treating substance abuse. However, the use of incentives by treatment facilities remains extremely low. Furthermore, it is not well understood how to design optimal incentives to treat opioid abuse. This project will conduct a randomized evaluation of two incentive schemes for people with opioid use disorders, one incentivizing "inputs" to abstinence, and one incentivizing the "outcome" of abstinence. Both schemes are implemented with a novel mobile application, making them uniquely low-cost, low-hassle, and scalable. Effects will be measured on abstinence outcomes, including longest duration of abstinence and the percentage of negative drug tests, and the persistence of the effects will be assessed. In combination with survey data, variation from the experiment will shed light on the barriers to abstinence more broadly and inform our understanding of optimal incentive design. A randomized pilot at the Aurora Health Adult Behavioral Program in Milwauke, Wisconsin is currently under way (AEA Registry Record No. AEARCTR-0005000.)

DE-BIASING OVER-OPTIMISM ABOUT PERSONAL COVID-19 HEALTH RISK

With Seema Jayachandran and Rebecca Dizon-Ross

Providing people with information about their health risk is an important part of the policy response to a public health crisis. However, the most effective way to present such information is unknown, particularly in light of behavioral biases people have. One such bias is over-optimism about one's health risk (i.e., a tendency to believe that one's risk is lower than it is), which has been documented in many settings and shown to lead to riskier behaviors. This study aims to test whether interventions that offset people’s over-optimism can improve the effectiveness of information provision. We do so in the context of the COVID-19 pandemic, among a population that is particularly vulnerable to severe complications from COVID-19, namely diabetics, pre-diabetics and hypertensives, who represent a large and growing segment of the population in India. Fieldwork is completely remote and expected to be completed in spring 2021.

 

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