Poor Economics

by Abhijit Banerjee

  For example, the poor in many countries seem to have the theory that it is important that medicine be delivered directly to the blood—this is why they want injectables. To reject this (plausible) theory, you have to know something about the way the body absorbs nutrients through the digestive tract and something about why proper sterilization of needles requires high temperatures. In other words, you need at least high school biology.

  To make matters worse, learning about health care is inherently difficult not only for the poor, but for everyone.33 If patients are somehow convinced that they need shots to get better, there is little chance that they could ever learn they are wrong. Because most diseases that prompt visits to the doctor are self-limiting (i.e., they will disappear no matter what), there is a good chance that patients will feel better after a single shot of antibiotics. This naturally encourages spurious causal associations: Even if the antibiotics did nothing to cure the ailment, it is normal to attribute any improvement to them. By contrast, it is not natural to attribute causal force to inaction: If a person with the flu goes to the doctor, and the doctor does nothing, and the patient then feels better, the patient will correctly infer that it was not the doctor who was responsible for the cure. And rather than thanking the doctor for his forbearance, the patient will be tempted to think that it was lucky that everything worked out this time but that a different doctor should be seen for future problems. This creates a natural tendency to overmedicate in a private, unregulated market. This is compounded by the fact that, in many cases, the prescriber and the provider are the same person, either because people turn to their pharmacists for medical advice, or because private doctors also stock and sell medicine.

  It is probably even harder to learn from experience about immunization, because it does not fix an existing problem, but rather protects against potential future problems. When a child is immunized against measles, that child does not get measles. But not all children who are not immunized actually contract measles (especially if others around them who are the potential source of infection are immunized), so it is very difficult to draw a clear link between immunization and the lack of disease. Moreover, immunization just prevents some diseases—there are many others—and uneducated parents do not necessarily understand what their child is supposed to be protected against. So when the child gets sick despite being immunized, the parents feel cheated and probably resolve not to go through with it again. They may also not understand why all the different shots in the basic immunization regime are needed—after two or three shots, parents might feel that they have done what they should. It is all too easy to get misleading beliefs about what might work in health.

  Weak Beliefs and the Necessity of Hope

  There is potentially another reason the poor may hold on to beliefs that might seem indefensible: When there is little else they can do, hope becomes essential. One of the Bengali doctors we spoke to explained the role he plays in the lives of the poor as follows: “The poor cannot really afford to get treated for anything major, because that involves expensive things like tests and hospitalization, which is why they come to me with their minor ailments, and I give them some little medicines which make them feel better.” In other words, it is important to keep doing something about your health, even if you know that you are not doing anything about the big problem.

  In fact, the poor are much less likely to go to the doctor for potentially life-threatening conditions like chest pains and blood in their urine than with fevers and diarrhea. The poor in Delhi spend as much on short-duration ailments as the rich, but the rich spend much more on chronic diseases.34 So it may well be that the reason chest pains are a natural candidate for being a bhopa disease (an older woman once explained to us the dual concepts of bhopa diseases and doctor diseases—bhopa diseases are caused by ghosts, she insisted, and need to be treated by traditional healers), as are strokes, is precisely that most people cannot afford to get them treated by doctors.

  It is probably for the same reason that in Kenya, traditional healers and preachers have been particularly in demand to cure HIV/AIDS (their services are proudly advertised on hand-painted billboards in every town). There was not much that allopathic doctors could really do (at least until anti-retrovirals became more affordable), so why not try the traditional healer’s herbs and spells? They were cheap and at the very least gave the patient a sense of doing something. And since symptoms and opportunistic infections come and go, it is possible to believe, at least for a little while, that they have an effect.

  This kind of grasping at straws is not specific to poor countries. This is also what the privileged few in poor countries and the citizens of the First World do when they face a problem that they do not know how to remedy. In the United States, depression and back pains are two conditions that are both poorly understood and debilitating. This is why Americans are constantly going between psychiatrists and spiritual healers, or yoga classes and chiropractors. Since both conditions come and go, sufferers go through cycles of hope and disappointment, each time wanting to believe for a moment at least that the new cure must be working.

  Beliefs that are held for convenience and comfort may well be more flexible than beliefs that are held out of true conviction. We saw signs of this in Udaipur. Most people who go to the bhopa also go to the Bengali doctor and the government hospital and do not seem to stop to think about the fact that these represent two entirely different and mutually inconsistent belief systems. They do talk about bhopa diseases and doctor diseases, but when a disease persists they seem not to insist on this distinction, and are willing to use both.

  The issue of what beliefs mean to people came up a lot when Seva Mandir was considering what it could do to improve immunization, after discovering that even its system of well-run monthly camps left four-fifths of children not fully immunized. Some local experts argued that the issue was rooted in people’s belief systems. They claimed that immunization had no place in the traditional belief system—in rural Udaipur, among other places, traditional belief has it that children die because they catch the evil eye, and the way to catch the evil eye is by being displayed in public. This is why parents don’t take their children outside for the first year of life. Given this, the skeptical experts argued, it would be exceedingly difficult to convince villagers to immunize their children without first changing their beliefs.

  Notwithstanding these strong views, when Seva Mandir set up immunization camps in Udaipur, we managed to convince Neelima Khetan, Seva Mandir’s CEO, to try something on a pilot basis: offer 2 pounds of dal (dried beans, a staple in the area) for each immunization and a set of stainless steel plates for completing the course. The doctor in charge of Seva Mandir’s health program was initially quite reluctant to try this out. On the one hand, it seemed wrong to bribe people to do the right thing. They should learn on their own what is good for their health. On the other hand, the incentive we proposed seemed much too weak: If people do not immunize their children, given the huge benefits of doing so, they must have some strong reason behind it. If they believed, for example, that taking their children out would cause harm, 2 pounds of dal (worth only 40 rupees, or $1.83 USD PPP, less than half the daily wage earned by working in a public works site) was not going to persuade them. We had known people at Seva Mandir for long enough that we could persuade them that this was still an idea worth trying on a small scale, and thirty camps with incentives were established. They were a roaring success. The immunization rate in the village where the camps were set up increased sevenfold, to 38 percent. In all neighboring villages, within about 6 miles, it was also much higher. Seva Mandir discovered that offering the dal, paradoxically, actually lowered the cost per immunization by increasing efficiency, because the nurse, whose time was already paid for, was kept busy.35

  Seva Mandir’s immunization program is one of the most impressive we have ever evaluated, and probably the one that has saved the most lives. We are therefore working, with Seva Mandir and others, to enc
ourage replications of this experiment in other contexts. Interestingly, we are running into some resistance. Doctors point out that 38 percent is far from the 80 percent or 90 percent required to achieve “herd immunity,” the rate at which an entire community is fully protected: WHO targets 90 percent coverage nationally for the basic immunization, and 80 percent in every subunit. For some in the medical community, if full protection for the community is not going to be achieved, there is no reason to subsidize some households to do what they should do for their own good anyway. Although it would certainly be excellent to be able to get to full coverage, this “all or nothing” argument is only superficially sensible: Even if immunizing my own child does not contribute to eradicating the disease, it still protects not only my child but also others around him.36 There is thus still a huge social benefit from increasing full immunization rates against basic diseases from 6 percent to 38 percent.

  In the end, the mistrust of incentives for immunization comes down to an article of faith for both those on the right and the left of the mainstream political spectrum: Don’t try to bribe people to do things that you think they ought to do. For the right, this is because it will be wasted; for the conventional left, which includes much of the public health community and the good doctor from Seva Mandir, this is because it degrades both what is given and the person who gets it. Instead, we should focus on trying to convince the poor of the benefits of immunization.

  We think that both of these views are somewhat wrongheaded ways to think about this and other similar problems, for two reasons. First, what the 2-pounds-of-dal experiments demonstrate is that in Udaipur at least, the poor might appear to believe in all kinds of things, but there is not much conviction behind many of those beliefs. They do not fear the evil eye so much that they would pass up the dal. This must mean that they actually know they are in no position to have a strong basis to evaluate the costs and benefits of vaccines. When they actually know what they want—marrying their daughter to someone from the right caste or religion, to take an unfortunate but important example—they are not at all easy to bribe. So, although some beliefs the poor have are undoubtedly strongly held, it is a mistake to consider that it is always the case.

  There is a second reason this is wrong. Both the right wing and the left wing seem to assume that action follows intention: that if people were convinced of the value of immunization, children would be immunized. This is not always true, and the implications are far-reaching.

  New Year’s Resolutions

  One obvious sign that resistance to immunization is not very deep is that 77 percent of children received the first vaccine in the villages where the camps did not offer dal: People seem to be willing to start the immunization process, even without any incentives. The problem is to get them to complete it. This is also why the full immunization rate does not go beyond 38 percent—the incentives make people come a few more times, but not enough to get the full five shots, despite the free stainless steel plates that wait for them if they complete the course.

  It seems that this might have a lot to do with the same reason that, year after year, we have trouble sticking to our New Year’s resolution to go to the gym regularly, despite knowing that it may save us from a heart attack down the line. Research in psychology has now been applied to a range of economic phenomena to show that we think about the present very differently from the way we think about the future (a notion referred to as “time inconsistency”).37 In the present, we are impulsive, governed in large part by emotions and immediate desire: Small losses of time (standing in line to get the child immunized) or petty discomforts (glutes that need to be woken up) that have to be endured right now feel much more unpleasant in the moment than when we think about them without a sense of immediacy (say, after a Christmas meal that was heavy enough to rule out all thoughts of immediate exercise). The reverse, of course, goes for small “rewards” (candy, a cigarette) that we really crave in the present; when we plan for the future, the pleasure from these treats seems less important.

  Our natural inclination is to postpone small costs, so that they are borne not by our today self but by our tomorrow self instead. This is an idea that we will see again in future chapters. Poor parents may even be fully convinced of the benefits of immunization—but these benefits will accrue sometime in the future, while the cost is incurred today. It makes sense, from today’s perspective, to wait for tomorrow. Unfortunately, when tomorrow becomes today, the same logic applies. Likewise, we may want to postpone the purchase of a bed net or a bottle of Chlorin until later, because we have better use for the money right now (there is someone frying delicious conch fritters across the street, say). It is easy to see how this could explain why a small cost discourages the use of a life-saving device, or why small incentives encourage it. The 2 pounds of dal works because it is something that the mother receives today, which compensates her for the cost she bears for getting her child immunized (the couple of hours spent bringing her child to the camp or the low fever that the shot sometimes causes).

  If this explanation is correct, it suggests a new rationale for mandating specific preventive health behaviors or for providing financial incentives that go beyond the traditional economic argument we have already suggested, which is that it makes sense for society to subsidize or enforce behaviors that have benefits for others. Fines or incentives can push individuals to take some action that they themselves consider desirable but perpetually postpone taking. More generally, time inconsistency is a strong argument for making it as easy as possible for people to do the “right” thing, while, perhaps, leaving them the freedom to opt out. In their best-selling book Nudge: Improving Decisions About Health, Wealth, and Happiness, Richard Thaler and Cass Sunstein, an economist and a law scholar from the University of Chicago, recommend a number of interventions to do just this.38 An important idea is that of default option: The government (or a well-meaning NGO) should make the option that it thinks is the best for most people the default choice, so that people will need to actively move away from it if they want to. So people have the right to choose what they want, but there is a small cost of doing so, and as a result, most people end up choosing the default option. Small incentives, like giving dal for vaccines, are another way to nudge people, by giving them a reason to act today, rather than indefinitely postpone.

  The key challenge is to design “nudges” tailored to the environment of developing countries. For example, the key challenge with chlorinating water at home is that you have to remember to do it: The bleach has to be purchased, and the right number of drops have to be put in before anyone drinks the water. This is what is so great about piped water—it comes chlorinated to our homes; we don’t need to think about it. How does one nudge people to chlorinate their drinking water, where piped water is not available? Michael Kremer and his colleagues came up with one method: a (free) chlorine dispenser, called “one turn,” installed next to the village well, where everybody goes to get water, which delivers the right quantity of chlorine at one turn of a knob. This makes the chlorination of water as easy as possible, and because that leads many people to add chlorine every time they collect water, this is the cheapest way to prevent diarrhea among all the interventions for which there is evidence from randomized trials.39

  We were less fortunate (or, more likely, less competent) when we designed a program for the iron fortification of flour with Seva Mandir to deal with rampant anemia. We had tried to design the program with a built-in “default” option: A household had to decide once and only once whether it wanted to participate. The flour of a participating household would then always be fortified. But unfortunately, the incentive of the millers (who were paid a flat fee regardless of how much flour they fortified) was to start from the opposite default option: not to fortify unless the household required it. As we discovered, the small cost of having to insist on fortification was large enough to discourage most people.40

  Nudging or Convincing?

  In many
cases, time inconsistency is what prevents our going from intention to action. In the specific case of immunization, however, it is hard to believe that time inconsistency by itself would be sufficient to make people permanently postpone the decision if they were fully cognizant of its benefits. For people to continuously postpone getting their children immunized, they would need to be constantly fooled by themselves. Not only do they have to think that they prefer to spend time going to the camp next month rather than today, they also have to believe that they will indeed go next month. We are certainly somewhat naïve and overconfident about our own ability to do the right thing in the future. But if parents actually believe in the benefits of immunization, it seems unlikely that they can keep fooling themselves month after month by pretending that they will do it next month until the entire two-year window runs out and it is too late. As we will see later in the book, the poor find ways to force themselves to save despite themselves, which requires a great deal of sophisticated financial thinking. If they really believed that immunization is as wonderful as WHO believes it to be, they would probably have figured out a way to overcome their natural tendency to procrastinate. The more plausible explanation is that they procrastinate and they underestimate the benefits.