What Is the Price of Prevention?

New Evidence from a Field Experiment

Published in: Journal of Health Economics, v. 32, no. 1, Jan. 2013, p. 207-218

Posted on RAND.org on January 01, 2013

by Edward N. Okeke, Clement A. Adepiti, Kayode O. Ajenifuja

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Research Questions

  1. Does the cost of treatment influence the demand for preventive testing?
  2. What is the price elasticity of demand for cancer screening?
  3. Do prices help to “target” higher risk individuals?

How does increasing access to treatment affect the demand for preventive testing? In this paper we present results from a field experiment in Nigeria in which we offered cervical cancer screening to women at randomly chosen prices. To test our hypothesis, we also offered women a lottery where the payoff was a subsidy towards the cost of cervical cancer treatment (conditional upon a diagnosis of cervical cancer). We find that women randomly selected to receive the conditional cancer treatment subsidy were about 4 percentage points more likely to take up screening than those in the control group. We also show that reducing the price of screening by 10 cents increased take-up by about 1 percentage point. These results offer compelling evidence that the optimal set of subsidies to increase take-up of preventive testing in developing countries, must include subsidies towards treatment costs (in addition to price subsidies).

Key Findings

  • Subsidizing treatment costs increases the demand for preventive testing.
  • Prices matter but only partially.
  • We find some evidence that higher prices may help to target services to higher risk individuals.

Recommendation

  • Policies to increase preventive testing in developing countries should include subsidies towards treatment costs.

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