Working Paper: NBER ID: w23727
Authors: Liang Bai; Benjamin Handel; Edward Miguel; Gautam Rao
Abstract: Self-control problems constitute a potential explanation for the under-investment in preventive health care observed in low-income countries. A commonly proposed policy tool to solve such problems is offering consumers commitment devices. We conduct a field experiment to evaluate the effectiveness of different types of theoretically-motivated commitment contracts in increasing preventive doctor visits by hypertensive patients in rural India. We document varying levels of takeup of the different commitment contracts, but find no effects on actual doctor visits or individual health outcomes. Thus, a substantial number of individuals pay for commitments, but then fail to follow through on the specified task, losing money without experiencing any health benefit. We develop and structurally estimate a pre-specified model of consumer behavior under present bias with varying levels of naivete. The results are consistent with a large share of individuals being partially naive about their own self-control problems: in other words, they are sophisticated enough to demand some commitment, but overly optimistic about whether a given commitment is sufficiently strong to be effective. The results suggest that commitment devices may in practice be welfare diminishing, at least in some contexts, and serve as a cautionary tale about the role of these contracts in the health care sector.
Keywords: self-control; preventive health; commitment contracts; hypertension; India
JEL Codes: D91; I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| naivety regarding self-control problems (D91) | underestimation of commitment strength (D91) |
| commitment contracts (D86) | negative welfare implications (D62) |
| commitment contracts (D86) | preventive health care utilization (I11) |
| commitment contracts (D86) | failure to attend health camps (I19) |