The need for giving incentives

Published March 5, 2014
File photo
File photo

THE recently released Pakistan Demographic and Health Survey (PDHS) 2012-13 presents some startling comparisons. It reports 87 per cent of Pakistani households own a mobile phone and 60 per cent own television sets. At the same time, only 21 per cent of men and 16 per cent of women have attended primary school, and one in 14 children die before their first birthday.

On a similar note, the United Nations reported last year that six out of seven billion people in the world had mobile phones but only 4.5 billion had access to toilets, which left another 2.5 billion without proper sanitation. This results in high rates of open defecation, a reality for 43 million people in Pakistan.

Some argued that this is the textbook response to the basic problem of scarcity and choice. The market is said to determine the most efficient outcome based on demand and supply. But in the face of extreme scarcity, brought on by poverty, the market may not determine a solution that benefits society as a whole. There is a direct link between open defecation and malnutrition, vulnerability to disease and death.

This has serious policy implications, for the social costs of inadequate sanitation facilities, education and healthcare far outweigh the social benefits of owning a mobile phone. The problem in Pakistan is usually defined in supply-side terms, that is, the inadequacy of the basic health, education and sanitation infrastructure. While this can be argued to be the more important aspect of the problem, the demand side should also be considered.

The job of the policymaker is to help people make better choices. The most obvious way is to provide people with easy and free access to services - which goes back to the supply side. But there are other problems as well, such as the continued cultural resistance, especially in rural areas, to something as basic as primary education. Improving education alone would help people make better choices overall.

One solution is to offer school voucher schemes for those who have no choice but to put their young children to work.

Mobile phones and television sets provide instant gratification, but the benefits of an education, better health and hygiene are often too far in the future to matter, and poverty makes people’s time horizons even shorter.

The plight of our polio workers is not just restricted to the very real threat that they may be killed by terrorists on their way to work. In a recent article describing the daily difficulties of administering polio drops to infants across the country, a polio worker reported that it was usual for her to scale several floors of urban apartment buildings in low-income neighbourhoods only to be told by the mother answering the door that she was too busy cooking and that the worker should return at a more suitable time.

Economists Abhijit Banerjee and Ester Duflo led an experiment at an immunisation camp in India’s Udaipur district, which had been able to achieve a success rate of only six per cent. The experiment involved presenting the mother of a child brought in for vaccination with two pounds of dal and when her child completed the entire course the prize was a set of stainless steel plates. This led to a seven-fold increase in the number of fully immunised children in the area.

Another programme in Kenya was able to decrease the dropout rates for poor girls when it just paid for their school uniforms. In Pakistan’s case, improving the condition of toilets in girls’ schools will go a long way in reducing dropout rates.

Offering people such ‘nudges’ or choice altering incentives allows them to make better decisions for themselves and for society as a whole. Thus, the answer to our dismal social indicators lies not just in improving the social infrastructure but also in providing people incentives to make better choices. Priority should be placed on providing key incentives to help people focus on needs that are crucial.

The writer has a PhD in Public Policy and teaches at the University of Massachusetts, Boston. Her email address is: gmzulfiqar@gmail.com

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