Ordeal Mechanisms and Training in the Provision of Subsidized Products in Developing Countries

The cost-effectiveness of policies providing welfare-enhancing products for free or at highly subsidized prices is often compromised by the fact that many individuals do not use the products provided. The cost-effectiveness of these distribution programs can thus be improved by either targeting products to individuals more likely to use the product being provided or by increasing usage among those receiving the product. In this paper we present the results of a field experiment testing two policy instruments designed to improve the cost-effectiveness of a program to distribute free eyeglasses to myopic children in rural China. We first study how well an ordeal mechanism—imposing a non-monetary cost on recipients to acquire a product—targets the provision of eyeglasses to those who would use them and saves program resources by screening out those who would not. Our second intervention aims to increase uptake and usage by providing a training program on the benefits of eyeglasses and addressing misinformation that contributes to low levels of usage. We test how both of these approaches independently and jointly affect the cost-effectiveness of the program and overall usage of eyeglasses. Our results imply that both interventions improve cost-effectiveness relative to pure free distribution without compromising the primary policy goal of increasing overall usage. Combining the two interventions, however, provides no additional benefits in terms of cost-effectiveness or increasing usage relative to either intervention alone.