Poor Economics: Rethinking Poverty & the Ways to End it

by Abhijit V. Banerjee

Notwithstanding these strong views, when Seva Mandir set up immunization camps in Udaipur, we managed to convince Neelima Khetan, Seva Mandir’s CEO, to try something on a pilot basis: offer 2 pounds of dal (dried beans, a staple in the area) for each immunization and a set of stainless steel plates for completing the course. The doctor in charge of Seva Mandir’s health program was initially quite reluctant to try this out. On the one hand, it seemed wrong to bribe people to do the right thing. They should learn on their own what is good for their health. On the other hand, the incentive we proposed seemed much too weak: If people do not immunize their children, given the huge benefits of doing so, they must have some strong reason behind it. If they believed, for example, that taking their children out would cause harm, 2 pounds of dal (worth only 40 rupees, or $1.83 USD PPP, less than half the daily wage earned by working in a public works site) was not going to persuade them. We had known people at Seva Mandir for long enough that we could persuade them that this was still an idea worth trying on a small scale, and thirty camps with incentives were established. They were a roaring success. The immunization rate in the village where the camps were set up increased sevenfold, to 38 percent. In all neighboring villages, within about 6 miles, it was also much higher. Seva Mandir discovered that offering the dal, paradoxically, actually lowered the cost per immunization by in...