[Paper Review] Ordeal Mechanisms, Information, and the Cost-Effectiveness of Subsidies: Evidence from Subsidized Eyeglasses in Rural China

Sean Sylvia, Xiaochen Ma+3 more|arXiv (Cornell University)|Dec 2, 2018

Global Maternal and Child HealthMedicine41 references3 citations

TL;DR

This study evaluates cost-effective delivery mechanisms for subsidized eyeglasses in rural China using a randomized trial. Requiring a brief ordeal (e.g., waiting or effort) improved targeting without reducing usage, while information campaigns boosted uptake under free delivery but not under ordeal conditions. Free delivery combined with information proved most cost-effective, achieving the highest usage rate.

ABSTRACT

The cost-effectiveness of policies providing subsidized goods is often compromised by limited use of the goods provided. Through a randomized trial, we test two approaches to improve the cost-effectiveness of a program distributing free eyeglasses to myopic children in rural China. Requiring recipients to undergo an ordeal better targeted eyeglasses to those who used them without reducing usage relative to free delivery. An information campaign increased use when eyeglasses were freely delivered but not under an ordeal. Free delivery plus information was determined to be the most socially cost-effective approach and obtained the highest rate of eyeglass use.

Motivation & Objective

• To assess how different delivery mechanisms affect the cost-effectiveness of subsidized eyeglasses for myopic children in rural China.
• To evaluate whether ordeal mechanisms—requiring effort before receiving goods—improve targeting of beneficiaries without reducing usage.
• To examine whether information campaigns increase awareness and usage of subsidized eyeglasses.
• To compare the social cost-effectiveness of free delivery, ordeal mechanisms, and combined approaches.

Proposed method

• Conducted a randomized controlled trial across multiple villages in rural China to test different delivery mechanisms for free eyeglasses.
• Assigned schools to one of three treatment groups: free delivery, ordeal mechanism (e.g., waiting or effort to receive glasses), and free delivery plus information campaign.
• Collected data on eyeglass usage, beneficiary characteristics, and program costs to calculate cost-effectiveness.
• Used statistical models to compare usage rates and cost-effectiveness across treatment arms.
• Measured the impact of information campaigns on awareness and usage, particularly under different delivery conditions.
• Evaluated the social cost-effectiveness of each approach by comparing cost per additional user.

Experimental results

Research questions

• RQ1 Does requiring an ordeal before receiving eyeglasses improve the targeting of beneficiaries without reducing actual usage?
• RQ2 How does an information campaign affect eyeglass usage when combined with free delivery versus an ordeal mechanism?
• RQ3 Which delivery mechanism—free delivery, ordeal, or free delivery plus information—maximizes cost-effectiveness in terms of social impact per dollar spent?
• RQ4 To what extent does information reduce information frictions in the uptake of subsidized health goods?

Key findings

• Requiring an ordeal improved targeting of eyeglasses to children who were more likely to use them, without reducing overall usage rates compared to free delivery.
• Information campaigns significantly increased eyeglass usage when combined with free delivery, but had no significant effect when paired with an ordeal mechanism.
• The combination of free delivery and information resulted in the highest rate of eyeglass use and was determined to be the most socially cost-effective approach.
• Free delivery alone achieved high usage rates, but adding information further increased uptake, especially among those with lower initial awareness.
• The ordeal mechanism alone did not significantly increase usage, suggesting that while it improved targeting, it did not overcome behavioral or informational barriers.
• The study found that information and delivery mechanisms interact in complex ways, with information being most effective when delivery is frictionless.