Jeff Sachs says efforts to distribute mosquito nets in Africa to help fight malaria have been hindered by a desire to promote markets:
Getting Practical in Controlling Malaria, by Jeffrey D. Sachs, Project Syndicate: Many international assistance programs fail because they are badly designed and/or too complicated. The result is that the poor don’t get the help they need, and taxpayers in rich countries lose confidence in the use of their aid funds.
A case in point has been malaria control. If rich countries adopt simpler and more practical strategies to help Africa fight malaria, they can save millions of Africans while building enthusiastic support among their citizens. ...
Malaria is largely preventable and completely treatable at low cost. ... Prevention is best accomplished by modern anti-malaria bed nets, which are treated with insecticide. These nets cover people while they sleep, and repel or kill the mosquitoes, which tend to bite during the night. The nets reduce the number of bites..., but they do not eliminate them. If people get bitten despite the nets, they require treatment within a few hours of the onset of symptoms.
There are two major obstacles to solving the malaria problem. First, Africa’s poor cannot afford insecticide-treated bed nets and the correct medicines. ... Second, African villagers lack access to cars or trucks, so they have to walk several miles to reach a clinic. An infected child is often dead or comatose by the time a mother reaches a clinic.
If rich-country governments thought practically about malaria and recognized that it is a full-scale emergency, they could support simple and practical solutions: bed nets and timely access to medicine. Rich countries would buy bed nets from companies that produce them and work with African governments to distribute them free of charge to every African household. And they would work with African governments to ensure that the correct medicines are available for quick use within each village. ...
[T]he total cost of ... giving bed nets at no cost to all Africans, and providing the right medicines within every village – is around ... $2.50 per citizen of the rich countries.
But the rich countries have instead adopted failed strategies. Rather than giving away bed nets, rich-country organizations ... sell them to the extreme poor, albeit at heavily discounted prices. This policy reflects a shortsighted ambition to promote markets rather than the direct and over-riding goals of saving lives and removing bottlenecks to long-term economic development. The tragic result has been extremely low use of nets throughout most of Africa, since impoverished people lack the purchasing power to buy nets.
Second, donor governments have failed to promote simple ways to ensure the availability of medicines in villages across the continent. Rather than shipping medicines to each country on the basis of estimated needs, donor agencies have set up a complicated purchasing system that has led to years of delay in getting medicines to the villages. ...
People across Africa have shown that they are ready to mobilize their efforts if we offer practical means to help them. ...
Felix at Economonitor has a different view:
Jeff Sachs on malaria, by Felix Salmon: Jeffrey Sachs is fed up with malaria programmes which fail, and he's surely right that malaria is both preventable and not being prevented. But does he have the reasons, and the solutions, right? ...
I'm not convinced. ... Sachs knows full well that the reason for selling bed nets is not "a short-sighted ambition to promote markets" – there's no market in bed nets. Rather, there is quite a lot of evidence that Africa's poor value things they pay for, and don't value things they get for free. As a result, bed nets which have been paid for get used more, and more effectively, than bed nets which have been given away.
Similarly, there's little evidence that Africa's governments have the infrastructure and institutions in place to effectively and equitably distribute malaria medicines which have been given to them for nothing. I worry that if the world signed on to Sachs's plan tomorrow, the net result would be $2.5 billion per year being spent on bed nets and medicines which would end up stockpiled somewhere near an international airport. A system of payments for these things creates an incentive to get them to where they are needed. Neither USAID nor anybody else wants to make money from these programmes. But before we give up on the small payments which do exist, I'd want to see some concrete evidence that doing so results in positive outcomes in practice.
There is this recent piece of research:
How Small is Zero Price? The True Value of Free Products, WP 06-16 by Kristina Shampan’er and Dan Ariely, FRB Boston: Abstract ...[W]e propose that ... the benefits associated with free products are perceived to be higher. We test this ... [T]he results show that, in the zero-price condition, the proportion of participants choosing the less attractive [good] dramatically increases... Thus, individuals seem to act as if pricing a good as free not only decreases its cost, but also adds to its benefits. ...
On the supply side, it seems reasonable that payments would be required to get nets and drugs "where they are needed," e.g. a truck driver needs to be paid to deliver drugs to villages.
On the demand side, I'm not familiar with the evidence that the poor in Africa don't value the things they get for free. But suppose one villager gets a net for free when all the neighbors had to pay for the identical net. It is counterintuitive to me that it would be valued less just because it was free.
As I said, I'm not familiar with this evidence at all, so this is pure speculation, but one reason demand can fall when price falls is lack of information on quality. For example, when people are confused about the quality of a good, they often use price as a signal for quality. This can lead, for example, to results where decreasing the price on a good such as a bottle of wine decreases the quantity purchased because people infer from the lower price that the wine is of lower quality.
Demand curves aren't sloping upward here, lack of information is causing a market failure. If consumers know that the high and low priced wines are of identical quality, quantity demanded will go up when the price goes down. It's only because price is being used as a signal for quality that such results come about.
If the poor in Africa or anywhere else are used to being given stuff only when it is junk, and being forced to pay at least a nominal fee when the good is of even moderate quality, they will come to believe that free is a signal for "low quality" or "doesn't work." Without good information, and with many such experiences in the past, it would be natural to conclude that a free mosquito net is more trouble than it's worth.
But setting speculation aside, in the end, I come down on the opposite side of Felix's bottom line. Where he says:
But before we give up on the small payments which do exist, I'd want to see some concrete evidence that doing so results in positive outcomes in practice.
I would say:
But before we continue to impose payments on the poor, even small ones, I'd want to see some concrete evidence that doing so results in positive outcomes in practice.
Posted by Mark Thoma on Wednesday, December 27, 2006 at 12:15 AM in Economics, Policy |
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