Department of Economics and Business Economics

Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets

Research output: Working paperResearch

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Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets. / Bhattacharya, Debopam; Dupas, Pascaline; Kanaya, Shin.

Aarhus : Institut for Økonomi, Aarhus Universitet, 2013.

Research output: Working paperResearch

Harvard

APA

Bhattacharya, D., Dupas, P., & Kanaya, S. (2013). Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets. Institut for Økonomi, Aarhus Universitet. CREATES Research Papers No. 2013-6

CBE

MLA

Bhattacharya, Debopam, Pascaline Dupas, and Shin Kanaya Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets. Aarhus: Institut for Økonomi, Aarhus Universitet. (CREATES Research Papers; Journal number 2013-6). 2013., 57 p.

Vancouver

Bhattacharya D, Dupas P, Kanaya S. Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets. Aarhus: Institut for Økonomi, Aarhus Universitet. 2013 Mar 1.

Author

Bhattacharya, Debopam ; Dupas, Pascaline ; Kanaya, Shin. / Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets. Aarhus : Institut for Økonomi, Aarhus Universitet, 2013. (CREATES Research Papers; No. 2013-6).

Bibtex

@techreport{1ba43609992f46648dcc3f740086186f,
title = "Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets",
abstract = "Regular use of effective health-products such as insecticide-treated mosquito nets (ITN) by a household benefits its neighbors by (a) reducing chances of infection and (b) raising awareness about product-effectiveness, thereby increasing product-use. Due to their potential social benefits and high purchase price, causing free-riding and sub-optimal private procurement, such products may be subsidized in developing countries through means-testing. Owing to associated spillover effects, cost-benefit analysis of such subsidies requires modelling behavioral responses of both the subsidized household and its neighbors. Using experimental data from Kenya where subsidies were randomized, coupled with GPS-based location information, we show how to estimate aggregate ITN use resulting from means-tested subsidies in the presence of such spatial spillovers. Accounting for spillovers introduces infinite-dimensional estimated regressors corresponding to continuously distributed location coordinates and makes the inference problem novel. We show that even if individual ITN use unambiguously increases with increasing incidence of subsidy in the neighborhood, ignoring spillovers may over- or under-predict overall ITN use resulting from a specific targeting rule, depending on the resulting aggregate incidence of subsidy. Applying our method to the Kenyan data, we find that (i) individual ITN use rises with neighborhood subsidy-rates, (ii) under means-testing, predicted ITN use is a convex increasing function of the subsidy incidence and (iii) ignoring spillovers implies a nearly-linear increasing relationship leading to over-estimation of ITN use at lower and under-estimation at higher subsidy rates.",
keywords = "Treatment effect, policy targeting, spillover, externality, overlapping neighborhood, social learning, experimental data, three-step estimation, bootstrap validity, Kenya",
author = "Debopam Bhattacharya and Pascaline Dupas and Shin Kanaya",
year = "2013",
month = mar,
day = "1",
language = "English",
series = "CREATES Research Papers",
publisher = "Institut for {\O}konomi, Aarhus Universitet",
number = "2013-6",
type = "WorkingPaper",
institution = "Institut for {\O}konomi, Aarhus Universitet",

}

RIS

TY - UNPB

T1 - Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets

AU - Bhattacharya, Debopam

AU - Dupas, Pascaline

AU - Kanaya, Shin

PY - 2013/3/1

Y1 - 2013/3/1

N2 - Regular use of effective health-products such as insecticide-treated mosquito nets (ITN) by a household benefits its neighbors by (a) reducing chances of infection and (b) raising awareness about product-effectiveness, thereby increasing product-use. Due to their potential social benefits and high purchase price, causing free-riding and sub-optimal private procurement, such products may be subsidized in developing countries through means-testing. Owing to associated spillover effects, cost-benefit analysis of such subsidies requires modelling behavioral responses of both the subsidized household and its neighbors. Using experimental data from Kenya where subsidies were randomized, coupled with GPS-based location information, we show how to estimate aggregate ITN use resulting from means-tested subsidies in the presence of such spatial spillovers. Accounting for spillovers introduces infinite-dimensional estimated regressors corresponding to continuously distributed location coordinates and makes the inference problem novel. We show that even if individual ITN use unambiguously increases with increasing incidence of subsidy in the neighborhood, ignoring spillovers may over- or under-predict overall ITN use resulting from a specific targeting rule, depending on the resulting aggregate incidence of subsidy. Applying our method to the Kenyan data, we find that (i) individual ITN use rises with neighborhood subsidy-rates, (ii) under means-testing, predicted ITN use is a convex increasing function of the subsidy incidence and (iii) ignoring spillovers implies a nearly-linear increasing relationship leading to over-estimation of ITN use at lower and under-estimation at higher subsidy rates.

AB - Regular use of effective health-products such as insecticide-treated mosquito nets (ITN) by a household benefits its neighbors by (a) reducing chances of infection and (b) raising awareness about product-effectiveness, thereby increasing product-use. Due to their potential social benefits and high purchase price, causing free-riding and sub-optimal private procurement, such products may be subsidized in developing countries through means-testing. Owing to associated spillover effects, cost-benefit analysis of such subsidies requires modelling behavioral responses of both the subsidized household and its neighbors. Using experimental data from Kenya where subsidies were randomized, coupled with GPS-based location information, we show how to estimate aggregate ITN use resulting from means-tested subsidies in the presence of such spatial spillovers. Accounting for spillovers introduces infinite-dimensional estimated regressors corresponding to continuously distributed location coordinates and makes the inference problem novel. We show that even if individual ITN use unambiguously increases with increasing incidence of subsidy in the neighborhood, ignoring spillovers may over- or under-predict overall ITN use resulting from a specific targeting rule, depending on the resulting aggregate incidence of subsidy. Applying our method to the Kenyan data, we find that (i) individual ITN use rises with neighborhood subsidy-rates, (ii) under means-testing, predicted ITN use is a convex increasing function of the subsidy incidence and (iii) ignoring spillovers implies a nearly-linear increasing relationship leading to over-estimation of ITN use at lower and under-estimation at higher subsidy rates.

KW - Treatment effect, policy targeting, spillover, externality, overlapping neighborhood, social learning, experimental data, three-step estimation, bootstrap validity, Kenya

M3 - Working paper

T3 - CREATES Research Papers

BT - Estimating the Impact of Means-tested Subsidies under Treatment Externalities with Application to Anti-Malarial Bednets

PB - Institut for Økonomi, Aarhus Universitet

CY - Aarhus

ER -