Working Paper: NBER ID: w25499
Authors: Manoj Mohanan; Katherine Donato; Grant Miller; Yulya Truskinovsky; Marcos Verahernndez
Abstract: A central issue in designing performance incentive contracts is whether to reward the production of outputs versus use of inputs: the former rewards efficiency and innovation in production, while the latter imposes less risk on agents. Agents with varying levels of skill may perform better under different contracts as well – more skilled workers may be better able to innovate, for example. We study these issues empirically through an experiment enabling us to observe and verify outputs (health outcomes) and inputs (adherence to recommended medical treatment) in Indian maternity care. We find that both output and input incentive contracts achieved comparable reductions in post-partum hemorrhage rates, the dimension of maternity care most sensitive to provider behavior and the largest cause of maternal mortality. Interestingly, and in line with theory, providers with advanced qualifications performed better and used new strategies under output incentives, while under input incentives, providers with and without advanced qualifications performed equally.
Keywords: performance incentives; health care; input contracts; output contracts; maternal health
JEL Codes: D86; J41; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| input incentive contracts (D86) | postpartum hemorrhage rates (J13) |
| output incentive contracts (L14) | postpartum hemorrhage rates (J13) |
| provider skill level (I11) | effectiveness of incentive contracts (D86) |
| input incentive contracts (D86) | health outcomes (I14) |
| output incentive contracts (L14) | health outcomes (I14) |
| no significant evidence of patient manipulation (C90) | health outcomes (I14) |
| no significant evidence of multitasking (D29) | health outcomes (I14) |