CeDEx Seminar - Pieter Serneels (University of East Anglia)

The demand for, and impact of, a workplace based insurance against malaria. Experimental evidence from Nigeria

Abstract: The demand for health care often remains weak in developing countries, despite evidence of large potential returns to health investment.  This is particularly relevant for poor people in rural areas, where health risks can be severe, and whose earnings depend primarily on labour intensive agricultural production. Surprisingly little is known about the economic impact of improved access to health care, specifically for agricultural workers. This paper studies the demand for warranted access to malaria testing and treatment by providing a specific workplace based insurance against malaria, and studies its impact on worker’s earnings, labour supply and productivity at a large sugarcane plantation in rural Nigeria.    Making use of a lab-in-the field experiment that uses a Becker-De Groot-Maarschak (BDM) approach we generate precise estimates of workers’ willingness to pay and find that demand is price sensitive with an estimated elasticity of -0.25.   Using exogenously varied price as an instrument, we estimate the causal impact of the malaria insurance on worker earnings, labour supply and productivity. The results indicate an overall impact on productivity of roughly 5%. Especially workers with low willingness to pay benefit considerably, as their earnings increase with roughly 25%, primarily through increases in daily productivity.  These large impacts seem to stem from those workers also having the lowest ability, facing liquidity constraints, having less information, and unfavourable trust preferences.