Background: To study how misaligned supply-side incentives impede health programs in developing countries, we tested the impact of performance pay for anemia reduction in rural China. To the best of our knowledge, our study is the first to evaluate performance pay for actual health improvement.
Methods: We conducted a cluster randomised trial of information, subsidies, and incentives for school principals to reduce anemia among fourth and fifth grade students in 72 randomly-selected rural primary schools across northwest China. Our experiment included a control and three treatment arms: (1) an information arm in which principals received education about anemia; (2) a subsidy arm in which principals received information and unconditional subsidies; and (3) an incentive arm in which principals received information, subsidies, and financial incentives for reducing anemia among students. Students, parents, nursing teams, and survey enumerators were blind to arm assignment. Primary outcomes were student hemoglobin concentrations; secondary outcomes were behavioral responses to the interventions.
Findings: Mean student haemoglobin concentration rose by 1.5 g/L (95% CI –1.1 to 4.1) in information schools, 0.8 g/L (–1.8 to 3.3) in subsidy schools, and 2.4 g/L (0 to 4.9) in incentive schools compared with the control group. This increase in haemoglobin corresponded to a reduction in prevalence of anaemia (Hb <115 g/L) of 24% in incentive schools. Interactions with pre-existing incentives for principals to achieve good academic performance led to substantially larger gains in the information and incentive arms: when combined with incentives for good academic performance, associated effects on student haemoglobin concentration were 9.8 g/L (4.1 to 15.5) larger in information schools and 8.6 g/L (2.1 to 15.1) larger in incentive schools.
Interpretation: Financial incentives for health improvement were modestly effective. Understanding interactions with other motives and pre-existing incentives is critical.