Topic 6: Topics in microeconomics of development
12/11 19/11 and 26/11
Health and Education
Motivation
Health, education, infrastructure are all public goods. The effective provision of public goods
is a key determinant of quality of life (not measured in per capita income) and an important
plank of poverty reduction strategy (the rich can find private alternatives, lobby for better
services, or ”exit”).
Market under provides these goods as prices do not fully reflect marginal social benefit.
State failure means there is poor organization which can lead to under-provision. Traditional
view equated public goods to government provision & ignored government failure. Role of
non-state non-market institutions such as voluntary & community organizations
World Development Report 2004
Governments spend on average 1/3 of their budget on health & education but little reaches
the poor. Even when it is targeted to the poor, there is leakage (it is really hard to measure
to what extent - see Olken, 2005). There is rampant absenteeism & poor quality service in
poor countries (e.g., 74% doctors absent in primary health care facility in Bangladesh, 25%
teachers in India, 40% health providers in India) These tables have been taken from Kremer
et al ”Missing in Action: Teacher and Health Worker Absence in Developing Countries” (JEP,
Winter 2006). It is based on random inspections by survey teams (as opposed to attendance
records at the facility). Absenteeism is seen to decline with income but it is high at all levels.
Not efficient: teacher and student absence are not highly correlated.
The people that are more likely to be absent: Male (+), Union member (+), Head teacher (+),
Born in school district (-), School infrastructure is poor (+), Teacher recognition program –
providing incentives (-)
New teachers are likely to be placed in villages where public schools are particularly bad, if
you are a senior teacher and you know more people you can get better postings, this bias
makes things worse for schools. Despite 25% absence rate of teachers in India, no teachers
are fired and only less than 1% of head-teachers are transferred. There are no punishments
for not turning up to work. There are similar absence levels among health providers. The
real puzzle is why people show up at all.
The World Bank’s World Development Report of 2004 was devoted to the topic of
improving public service delivery to the poor. There are two broad categories of public
goods that are needed to strengthen the position of the poor in developing countries:
Market supporting public goods - those state interventions that make it feasible for the poor
to participate in markets and hence benefit from gains from trade, such as transport,
electricity, roads…
Market augmenting public goods - which deal with cases where even a well-functioning
market will not provide the correct level of the public good.
Health: Introduction
Improving health can improve growth.
“For urgent action by all governments, all health and development workers, and the world
community to protect and promote the health of all the people of the world” (World Health
, Organization, 1978) Which means everyone should have access to cheap and good
healthcare, by capping the cost of health provision by the government.
Investment in health has gone up in the past few years. Access to health care is no longer a
major problem in most parts of the world.
Policy makers have shifted towards a broader “systems” view of universal health coverage,
one that seeks to provide all people with access to essential health services without financial
hardship. Patients must have access to services that are high quality. The problem is that
there has been an investment in healthcare which hasn’t seen its fruits, there is an issue
when it comes to implementation and quality of healthcare. The effectiveness of healthcare
is put into question, is it because doctors do not show up for work (40-60% absence) or the
degree to which patients receive timely and accurate diagnoses and evidence based
treatments for their conditions.
Rural Madhya Pradesh has 11 healthcare providers within 3 km of the village, most of whom
have no formal training. Access, here, is less of a problem, the challenges lie mainly in
misdiagnosis. In India, China, and Kenya most cases were incorrectly diagnosed.
Standardised patients in Kenya generally received higher quality care than those in India and
China. Generally people get misdiagnosed, 90% of angina patients in Nairobi were still
misdiagnosed as pneumonia. So access isn’t a problem, implementation is. The health
workers are not necessarily overworked, they see really few patients a day, on the average
they see about 5.7 patients a day for about less than an hour each. So stress isn’t a factor for
their mistakes. The problem is health providers do have their qualifications, but have poor
clinical knowledge. There is also a poor and high variability in medical education in most
countries, a sizeable numbers of untrained, non-physician clinicians are more
knowledgeable than their fully trained counterparts.
In most cases, 20-50% of nurses are more knowledgeable than the poorest performing 25%
of doctors. The mean Kenyan nurse is more knowledgeable than 21% of doctors in Kenya,
78% of doctors in Madagascar, 32% in Nigeria, 25% in Tanzania, and 63% in Uganda. There
are also wide differences across states in India: informal providers in high performing states
like Tamil Nadu are more knowledgeable than fully trained doctors in low performing states
like Bihar. There is therefore, a clear difference between qualifications (training) and
medical knowledge which is surprisingly weak.
Clinical interactions
Loads of problems arise in these interactions. The average clinical interaction lasts 90
seconds. Across 68 countries and 28 million consultations found that the average
consultation “varied from 48 seconds in Bangladesh to 22.5 minutes in Sweden.” Short
consultation times were more prevalent in low income countries. Most at 5 to 10 minutes.
These first interactions create a gap between knowledge and what health providers actually
do. Short consultation times imply that even when doctors know what to do, they often fail
to do it. Doctors are humans who operate within complex systems. They react to incentives
– the same doctors seem to provide more effort in private clinics than in public ones. In a
Beijing hospital, when patients told doctors they would purchase medicines from an
external pharmacist (rather than the hospital pharmacy from which the prescriber receives
a salary bonus), antibiotic prescriptions fell from 77% to 11%. Change systems that produce
medical professionals who are poorly trained, under-motivated, and often assigned to clinics
with no peers or mentors leads to bad outcomes in healthcare systems.
12/11 19/11 and 26/11
Health and Education
Motivation
Health, education, infrastructure are all public goods. The effective provision of public goods
is a key determinant of quality of life (not measured in per capita income) and an important
plank of poverty reduction strategy (the rich can find private alternatives, lobby for better
services, or ”exit”).
Market under provides these goods as prices do not fully reflect marginal social benefit.
State failure means there is poor organization which can lead to under-provision. Traditional
view equated public goods to government provision & ignored government failure. Role of
non-state non-market institutions such as voluntary & community organizations
World Development Report 2004
Governments spend on average 1/3 of their budget on health & education but little reaches
the poor. Even when it is targeted to the poor, there is leakage (it is really hard to measure
to what extent - see Olken, 2005). There is rampant absenteeism & poor quality service in
poor countries (e.g., 74% doctors absent in primary health care facility in Bangladesh, 25%
teachers in India, 40% health providers in India) These tables have been taken from Kremer
et al ”Missing in Action: Teacher and Health Worker Absence in Developing Countries” (JEP,
Winter 2006). It is based on random inspections by survey teams (as opposed to attendance
records at the facility). Absenteeism is seen to decline with income but it is high at all levels.
Not efficient: teacher and student absence are not highly correlated.
The people that are more likely to be absent: Male (+), Union member (+), Head teacher (+),
Born in school district (-), School infrastructure is poor (+), Teacher recognition program –
providing incentives (-)
New teachers are likely to be placed in villages where public schools are particularly bad, if
you are a senior teacher and you know more people you can get better postings, this bias
makes things worse for schools. Despite 25% absence rate of teachers in India, no teachers
are fired and only less than 1% of head-teachers are transferred. There are no punishments
for not turning up to work. There are similar absence levels among health providers. The
real puzzle is why people show up at all.
The World Bank’s World Development Report of 2004 was devoted to the topic of
improving public service delivery to the poor. There are two broad categories of public
goods that are needed to strengthen the position of the poor in developing countries:
Market supporting public goods - those state interventions that make it feasible for the poor
to participate in markets and hence benefit from gains from trade, such as transport,
electricity, roads…
Market augmenting public goods - which deal with cases where even a well-functioning
market will not provide the correct level of the public good.
Health: Introduction
Improving health can improve growth.
“For urgent action by all governments, all health and development workers, and the world
community to protect and promote the health of all the people of the world” (World Health
, Organization, 1978) Which means everyone should have access to cheap and good
healthcare, by capping the cost of health provision by the government.
Investment in health has gone up in the past few years. Access to health care is no longer a
major problem in most parts of the world.
Policy makers have shifted towards a broader “systems” view of universal health coverage,
one that seeks to provide all people with access to essential health services without financial
hardship. Patients must have access to services that are high quality. The problem is that
there has been an investment in healthcare which hasn’t seen its fruits, there is an issue
when it comes to implementation and quality of healthcare. The effectiveness of healthcare
is put into question, is it because doctors do not show up for work (40-60% absence) or the
degree to which patients receive timely and accurate diagnoses and evidence based
treatments for their conditions.
Rural Madhya Pradesh has 11 healthcare providers within 3 km of the village, most of whom
have no formal training. Access, here, is less of a problem, the challenges lie mainly in
misdiagnosis. In India, China, and Kenya most cases were incorrectly diagnosed.
Standardised patients in Kenya generally received higher quality care than those in India and
China. Generally people get misdiagnosed, 90% of angina patients in Nairobi were still
misdiagnosed as pneumonia. So access isn’t a problem, implementation is. The health
workers are not necessarily overworked, they see really few patients a day, on the average
they see about 5.7 patients a day for about less than an hour each. So stress isn’t a factor for
their mistakes. The problem is health providers do have their qualifications, but have poor
clinical knowledge. There is also a poor and high variability in medical education in most
countries, a sizeable numbers of untrained, non-physician clinicians are more
knowledgeable than their fully trained counterparts.
In most cases, 20-50% of nurses are more knowledgeable than the poorest performing 25%
of doctors. The mean Kenyan nurse is more knowledgeable than 21% of doctors in Kenya,
78% of doctors in Madagascar, 32% in Nigeria, 25% in Tanzania, and 63% in Uganda. There
are also wide differences across states in India: informal providers in high performing states
like Tamil Nadu are more knowledgeable than fully trained doctors in low performing states
like Bihar. There is therefore, a clear difference between qualifications (training) and
medical knowledge which is surprisingly weak.
Clinical interactions
Loads of problems arise in these interactions. The average clinical interaction lasts 90
seconds. Across 68 countries and 28 million consultations found that the average
consultation “varied from 48 seconds in Bangladesh to 22.5 minutes in Sweden.” Short
consultation times were more prevalent in low income countries. Most at 5 to 10 minutes.
These first interactions create a gap between knowledge and what health providers actually
do. Short consultation times imply that even when doctors know what to do, they often fail
to do it. Doctors are humans who operate within complex systems. They react to incentives
– the same doctors seem to provide more effort in private clinics than in public ones. In a
Beijing hospital, when patients told doctors they would purchase medicines from an
external pharmacist (rather than the hospital pharmacy from which the prescriber receives
a salary bonus), antibiotic prescriptions fell from 77% to 11%. Change systems that produce
medical professionals who are poorly trained, under-motivated, and often assigned to clinics
with no peers or mentors leads to bad outcomes in healthcare systems.
