DEVELOPMENT ECONOMICS
DEVELOPMENT ECONOMICS APPLICATIONS
To help us move from theory to application, we will look at several common interventions and policies that target particular determinants of growth. We will look at the evidence around some of these interventions and their effectiveness.
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Module Sections
Building up Human Capital
How do families and individuals become healthier and smarter?
Programs focused on human capital development are key to development
Health Programs
Health programs prevent serious illness and death, thereby ensuring they can still contribute to economic activity.
Common programs include the following:
- Immunization programs for babies & infants
- Health insurance programs for impoverished person
- Distribution of prophylactic medicines
Education Programs
Education programs make workers more productive and equip them with important skills.
Common programs include the following:
- Early childhood education and pre-school programs
- In-school pedagogy innovations
- Vocation training programs for unemployed workers
Health programs often focus on promoting an individual’s consumption of services and products
Incentivizing people to invest in their own health can have long-term impacts and savings
Concept Overview
Investments in health care can often prevent an individual from contracting severe illness or dying. However, beneficiaries may not completely appreciate the full benefits of these investments.
Financial incentives can help beneficiaries more appropriately weigh and assess future benefits. As such, incentives can increase consumption of health services.
Program Example: Vaccine Incentives in India
A study of an incentive program in India for parents that immunized their children found that incentives increased the proportion of children completing full vaccine regimes. A subsequent cost-benefit analysis found that, while financial incentives may costly, incentives were more cost-effective than other interventions like setting up mobile clinics.
Considering Root Causes
While incentives can potentially promote preventative health investments in some contexts, it may not be appropriate for all settings. Incentives may not be appropriate in promoting health investments when:
- There are significant barriers to accessing healthcare services (e.g., lack of clinics and professionals, distance to service providers, etc.).
- There is broad skepticism in effectiveness and safety of health investments.
Individuals are very sensitive to price of investments in healthcare products
Concept Overview
Despite well-known benefits of proven health products, some of these innovations are under-consaumed.
Providing health products for free may significantly increase consumption of health inputs. Research has shown that even small price increases can significantly reduce consumption of health inputs.
Program Example: Free Anti-Mosquito Bed Nets in Africa
A study on demand and willingness to pay for anti-mosquito bed nets found that even small price increases above a free price point significantly reduced demand. Importantly, people who received bed nets for free used the products just as much as those who paid for the bed nets – undermining traditional thinking about value of inputs provided for free.
Considering Price Sensitivity
Research has examined price sensitivity for a range of health products across various locations throughout the world. Similar responses to prices for health products have been observed for a range of items:
- Anti-Mosquito Bed Nets
- Deworming Pills
- Water Disinfectant Tablets
- Anti-microbial Soap
Education interventions can target individuals from infancy to adulthood
Early childhood interventions can have lasting impacts on a range of outcomes
Program Overview
Many education interventions aim to promote psychosocial stimulation of newborn children, especially in households with first-time mothers.
Developing Country Context
A 20-year study in Jamaica found that weekly visits by community health workers increased schooling, cognitive abilities, and household earnings.
Developed Country Context
A series of studies found nurse home visitation programs for first-time mothers in the US, UK, and Netherlands decreased child neglect and improved cognitive outcomes.
Training programs are common, but often need to respond to training context
Program Overview
Many countries have robust vocational and business training programs to help workers and small firms improve productivity and growth, with the aim of increasing profits. However, a large review of randomized evaluations has found that training alone is often insufficient in creating profits. Training and skills programs often create the most impact when tailed in the following manner:
Customize and Tailor Skills
Training programs are often too general and do not respond to specific challenges faced by workers. Skills also need to match firm size and complexity.
Address Contextual Barriers
Impacts of evaluated programs often differ based on participant education and gender, suggesting that interventions also need to address social and cultural norms.
Cash Transfer Programs
Cash transfers and loans may help provide additional capital for individuals to apply new training or skills. However, impact may be short-term.
References
- Banerjee, Abhijit Vinayak, Esther Duflo, Rachel Glennerster, and Dhruva Kothari. 2010. “Improving Immunisation Coverage in Rural India: Clustered Randomised Controlled Evaluation of Immunisation Campaigns with and without Incentives.” BMJ 340-222.
- Abdul Latif Jameel Poverty Action Lab (J-PAL). 2018. “The impact of price on take-up and use of preventive health products.” J-PAL Policy Insights. Last modified May 2018.
- Gertler, P., Heckman, J., Pinto, R., Zanolini, A., Vermeersch, C., Walker, S., … & Grantham-McGregor, S. (2014). Labor market returns to an early childhood stimulation intervention in Jamaica. Science, 344(6187), 998-1001
- Social Programs that Work. (2020, January 3). Nurse-family partnership – Social Healthcare programs that work. Social Programs that Work.
- Abdul Latif Jameel Poverty Action Lab (J-PAL). 2019. “Teaching business skills to support microentrepreneurs.” J-PAL Policy Insights. Last modified December 2019.
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