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One way to advance understanding of individual differences in decision making is to study the development of children’s decision making. This paper studies the causal effects of daycare attendance on children’s economic preferences and decision-making abilities, exploiting a lottery system that randomized admissions into oversubscribed daycare centers in Rio de Janeiro. Overall, daycare attendance had no effect on economic preferences or decision-making abilities. However, it did increase aversion to disadvantageous inequality (having less than one’s peer). This increase is driven mostly by girls, a result that reproduces in a different study that randomized admissions into preschool education.

In many low- and middle-income countries, health coverage has improved dramatically in the last two decades, but health outcomes have not. As such, effective coverage -- a measure of service delivery that meets a minimum standard of quality -- remains unacceptably low. This Policy Research Report examines one specific policy approach to improving effective coverage: financial incentives in the form of performance-based financing (PBF) or financial incentives to health workers on the front lines. The report draws on a rich set of rigorous studies and new analysis. When compared to business-as-usual, in low-income settings with centralized health systems PBF can result in substantial gains in effective coverage. However, the relative benefits of PBF are less clear when it is compared to two alternative approaches, decentralized facility financing which provides operating budget to frontline health services with facility autonomy on allocation, and demand-side financial support for health services (i.e., conditional cash transfers and vouchers). While PBF often results in improvements on the margins, closing the substantial gaps in effective health coverage is not yet within reach for many countries. Nonetheless, there are important lessons learned and experiences from the roll-out of PBF over the last decade which can guide health policies into the future.

This paper evaluates the effects of a program that transferred different amounts of cash to poor households in rural Guinea. The program’s aim was to improve children’s schooling and health outcomes in the immediate aftermath of the Ebola pandemic. In treated villages, households received cash conditional only on attending trainings promoting good health practices and schooling. The program randomized at two levels. The first level was between treated and control villages. The second level was within treated villages. Households were randomly distributed in three treatment arms: (i) no cash transfer, (ii) a cash transfer of 8 USD/quarter/child over two years, and (iii) a cash transfer twice as large as in group (ii). School enrollment increased nationwide and rapidly in the aftermath of Ebola. The authors find that it increased significantly more in treated villages. From a low baseline of around 40 percent of primary-school-age enrollment, treated villages increased their school enrollment by more than 11 percentage points compared to control villages. The effect is higher for larger cash transfers compared to those with no cash transfers in treated villages. School enrollment also increased among untreated households in treated villages, probably due to a combined effect—which cannot be differentiated—from spillovers and from the information campaigns. Despite the massive increase in school enrollment, there is no evidence of effects on learning measures. Health inputs such as vaccination deteriorated overall in Guinea in the aftermath of Ebola, and the program did not mitigate this fall.

Financial incentives for health providers and households are increasingly used to improve reproductive, maternal, and child health service coverage in low- and middle-income countries. This study provides a quantitative synthesis of their effectiveness. A systematic review was conducted of the effects of performance-based financing, voucher, and conditional cash transfer programs on six reproductive, maternal, and child health service indicators, with eligible evidence coming from randomized controlled trials and studies using double-difference, instrumental variables, and regression discontinuity designs. Four literature searches were conducted between September 2016 and March 2021 using seven academic databases, Google Scholar, development agency and think tank websites, and previous systematic reviews. Random effects meta-analysis was used to obtain mean effect sizes. From 58 eligible references 212 impact estimates were extracted, which were synthesized into 130 program-specific effect sizes. Financial incentives increase coverage of all considered reproductive, maternal, and child health indicators, but mean effects sizes are of modest magnitude. Effect size heterogeneity is typically low to moderate, and there is no indication that study bias risk, baseline indicator levels, or a combination of provider- and household-level incentives impact effect sizes. There is, however, weak evidence that mean effect sizes are somewhat smaller for performance-based financing than for voucher and conditional cash transfer programs, and that the increase in income, rather than the incentive itself, drives coverage improvements. Financial incentives improve reproductive, maternal, and child health service coverage. If future research confirms the preliminary finding that performance-based financing has smaller effects, voucher and conditional cash transfer programs are the preferred policy option among incentive interventions to achieve higher reproductive, maternal, and child health service coverage. The relative effectiveness and efficiency of incentives compared with unconditional increases of provider and household incomes, however, need to be studied further.

Using official COVID-19 death counts for 64 countries and excess death estimates for 41 countries, this paper finds a higher share of pandemic-related deaths in 2020 were at younger ages in middle-income countries compared to high-income countries. People under age 65 constituted on average (1) 11 percent of both official deaths and excess deaths in high-income countries, (2) 40 percent of official deaths and 37 percent of excess deaths in upper-middle-income countries, and (3) 54 percent of official deaths in lower-middle-income countries. These contrasting profiles are due only in part to differences in population age structure. Both COVID-19 and excess death age-mortality curves are flatter in countries with lower incomes. This is a result of some combination of variation in age patterns of infection rates and infection fatality rates. In countries with very low death rates, excess mortality is substantially negative at older ages, suggesting that pandemic-related precautions have lowered non-COVID-19 deaths. Additionally, the United States has a younger distribution of deaths than countries with similar levels of income.

In lower-income countries, the economic contractions that accompany lockdowns to contain the spread of COVID-19 can increase child mortality, counteracting the mortality reductions achieved by the lockdown. To formalize and quantify this effect, this paper builds a macro-susceptible-infected-recovered model that features heterogeneous agents and a country-group-specific relationship between economic downturns and child mortality, and calibrate it to data for 85 countries across all income levels. The findings show that in low-income countries, a lockdown can potentially lead to 1.76 children’s lives lost due to the economic contraction per COVID-19 fatality averted. The ratio stands at 0.59 and 0.06 in lower-middle and upper-middle income countries, respectively. As a result, in some countries lockdowns can actually produce net increases in mortality. In contrast, the optimal lockdown that maximizes the present value of aggregate social welfare is shorter and milder in poorer countries than in rich ones, and never produces a net mortality increase.

This paper presents the results of an impact evaluation of a performance-based financing pilot in rural areas of two regions of Tajikistan. Primary care facilities were given financial incentives conditional on general quality and the quantity provided of selected services related to reproductive, maternal and child health, and hypertension-related services. The study relies on a difference-in-difference design and large-scale household and facility-based surveys conducted before the launch of the pilot in 2015 and after three years of implementation. The performance-based financing pilot had positive impacts on quality of care. Significant impacts are measured on facility infrastructure, infection prevention and control standards, availability of equipment and medical supplies, provider competency, provider satisfaction, and even some elements of the content of care, measured through direct observations of provider-patient interactions. While the communities in the performance-based financing districts reported higher satisfaction with the local primary care facilities, and despite the improvements in quality, the findings suggest moderate effects on utilization: among the incentivized utilization indicators, only timely postnatal care and blood pressure measurements for adults were significantly impacted.

Do service providers respond to pecuniary incentives to serve the poor? Service delivery to the poor is complicated by the extra effort required to deliver services to them and the intrinsic incentives of service providers to exert this effort. Incentive schemes typically fail to account for these complications. A lab-in-the-field experiment with nearly 400 health workers in rural Burkina Faso provides strong evidence that the interaction of effort costs, ability, and intrinsic and extrinsic incentives significantly influences service delivery to the poor. Health workers reviewed video vignettes of medical cases involving poor and nonpoor patients under a variety of bonus schemes. Bonuses to serve the poor have less impact on effort than bonuses to serve the nonpoor; health workers who receive equal bonuses to serve poor and nonpoor patients see fewer poor patients than workers who receive only a flat salary; and bonuses operate largely through their influence on the behavior of pro-poor workers. The paper also presents novel evidence on the selection effects of contract type: pro-poor workers prefer the flat salary contract to the variable salary contract.

Education conditional cash transfer programs may increase school attendance in part due to the information they transmit to parents about their child's attendance. This paper presents experimental evidence that the information content of an education conditional cash transfer program, when given to parents independently of any transfer, can have a substantial effect on school attendance. The effect is as large as 75 percent of the effect of a conditional cash transfer incentivizing parents, and not significantly different from it. In contrast, a conditional transfer program incentivizing children instead of parents is nearly twice as effective as an "information only" treatment providing the same information to parents about their child's attendance. Taken together, these results suggest that children have substantial agency in their schooling decisions. The paper replicates the findings from most evaluations of conditional cash transfers that gains in attendance achieved by incentivizing parents financially do not translate into gains in test scores. But it finds that both the information only treatment and the alternative intervention incentivizing children substantially improve math test scores.

Behaviors that are putting people's health and well-being at risk are widespread in the developing world and some of them, like smoking and unhealthy diets, are on the rise. Some of these behaviors can be prohibited or prevented by taxation. But financial incentives such as conditional cash transfers are also increasingly proposed and tested to discourage such behaviors, in domains as varied as HIV/AIDS, drugs, alcohol, smoking, obesity, or early marriage prevention. This paper presents the theoretical justification for using such incentives, distinguishing between the price, income effects, and the nudge effects. The growing literature about the effectiveness of financial incentives to prevent undesirable behaviors is reviewed in detail for each type of harmful behavior. Finally, the paper discusses the long-term sustainability of such incentives, a key issue if they are to be scaled up beyond pilot programs and research projects. The current evidence on whether such incentives have an impact after they are discontinued is mixed. Some design features, like lotteries or commitment devices, could induce savings as well as increase effectiveness, therefore improving sustainability.

A booming literature has argued that mission-based motives are a central feature of mission-oriented labor markets. This paper shifts the focus to task-based motivation and finds that it yields significantly more effort than mission-based motivation. Moreover, in the presence of significant task motivation, mission motivation has no additional effect on effort. The evidence emerges from experiments with nearly 250 medical and nursing students in Burkina Faso. The students exert effort in three tasks, from boring to interesting. In addition, for half of the students, mission motivation is present: their effort on the task generates benefits for a charity. Two strong results emerge. First, task motivation has an economically important effect on effort, more than doubling effort. Second, mission motivation increases effort, but only for mundane tasks and not when the task is interesting. Moreover, even for mundane tasks, the effects of mission motivation appear to be less than those of task motivation.