The effect of price on demand for and use of bednets: evidence from a randomized experiment in Madagascar.

There is an on-going debate about whether health products, such as insecticide-treated bednets (ITNs) for protection against malaria, should be distributed for free or at a positive price to maximize ownership and use. One argument in favour of free distribution is related to positive externalities. Like vaccines, individual use of ITNs provides a community-wide protective effect against malaria even for non-users. In addition, price may act as a barrier to ownership particularly among those most at-risk who are frequently poor. Alternatively, charging a positive price may reduce donor dependence, more efficiently allocate nets to those most at risk of malaria, and encourage use through a hypothesized sunk cost effect, where individuals are more likely to use goods they pay for. Using a randomized experiment in Madagascar, we evaluate the impact of price on demand for and use of ITNs. We find that price negatively affects both demand and use of ITNs. When price increases by $0.55, demand falls by 23.1% points (CI 19.6–26.6; P < 0.01) and effective coverage falls by 23.1% points (CI 19.6–26.6; P < 0.01). We fail to find evidence of a screening effect for prices greater than zero, but households eligible for free ITNs are more likely to use them if they have more self-reported fevers in the household at baseline. We also fail to find evidence of a sunk cost effect, meaning that households are not more likely to use nets that they pay for. Our results suggest that: (1) only partially subsidizing ITNs significantly limits ownership and (2) distributing ITNs for free or at a small nominal price will maximize demand and effective coverage. Alternative sources of financing should be identified to completely (or almost completely) subsidize the cost of ITNs in order to maximize coverage of ITNs among poor populations at risk of malaria.