When Financial Incentives Backfire

Evidence from a Community Health Worker Experiment in Uganda

Published in: Journal of Development Economics, Volume 144 (May 2020). doi: 10.1016/j.jdeveco.2019.102437

Posted on RAND.org on February 13, 2020

by Zachary Wagner, John Bosco Asiimwe, David I. Levine

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There is growing support for an entrepreneurial community health worker (CHW) model, but the benefits of such a design are unclear. We randomly assigned CHWs in Uganda to sell treatment for child diarrhea door-to-door and retain the profits or to deliver treatment to homes for free. We find that, despite stronger financial incentives, the entrepreneurial model led to substantially less effort (fewer household visits) than the free delivery model. Qualitative evidence suggests that selling had a social penalty whereas free distribution was socially rewarding. Our results call into question the notion that an entrepreneurial model necessarily increases CHW effort relative to free distribution.

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