M-CHEP Research Seminar - Hybrid event
Carlos Riumallo Herl, PhD (Erasmus School of Economics)

Tailoring incentives for prevention: A field experiment in El Salvador

Abstract

Financial incentives have been used extensively to encourage appropriate health behaviors. However, these incentives are often untargeted and therefore may not reach the populations that benefit the most. In this study, we evaluate whether incentives tailored to people’s unobserved risks can encourage the demand for preventive healthcare services. For this study, we partnered with a micro‑finance organization in El Salvador and randomized 906 informal workers to receive either a fixed or tailored incentive for completing a free preventive screening. We found that both incentives increased the uptake of preventive services by approximately 30%, but tailored incentives were not more effective than fixed ones at encouraging higher-risk individuals. The lack of effective targeting in the tailored incentives is explained by the participants’ inaccurate risk perceptions. Our results show that there is no association between actual and perceived risk, which emphasizes the limitation of incentives that rely on individuals knowing and revealing their own risk types. Overall, our results suggest that tailored incentives are equally efficient at promoting access to preventive services, as compared with fixed incentives, but not better at targeting those that would benefit more. This highlights the limitations of using such types of incentive design when conditions depend on largely unobservable risk factors.