Encouraging payment for services : experimental and quasi-experimental evidence from developing countries

• Main Author: Kettle, Stewart
• Published: University of Bristol 2016
• Subjects: 330
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.702114

This thesis presents three studies which examine the decisions of individuals to pay for clean water and public services. The three impact evaluations, conducted in India and Guatemala, demonstrate that small changes to the way services are provided and presented to individuals can have a large impact on demand for them. The first chapter looks at whether tariffs discourage the use of NGO funded water quality projects in Telengana, India. The estimation strategy takes advantage of panel data from water purification plants where the tariff for 20 litres of water changed. In this setting, a one standard deviation decrease in price is estimated to cause a six percent increase in uptake. The second paper evaluates an adaptation to similar NGO water projects which increased the hours clean drinking water was accessible for, from 4 hours a day to 24. The results from the cluster randomised controlled trial show that the intervention increased demand for clean water by 22 percent. The final chapter presents findings from a nationwide randomised controlled trial in Guatemala that tested various letter reminders to promote tax compliance. The results show that whilst all letters increased the rate of declaration, only two of the letters, which were adapted using behavioural design, were successful at increasing the rate of payment and the average amount paid per letter received. These two letters more than tripled tax receipts compared to the no letter, or the original letter. The best performing letter, if sent to all taxpayers in the sample, would have generated an estimated US$757,837 of extra tax revenue in 11 weeks compared to no letter, over 35 times the cost of sending the letters. Overall, the thesis provides evidence that both economic and behavioural dimensions affect payment for clean water and tax, and so both must be considered when development practitioners and policy makers design 'customer facing' programmes. The methodology used in the three studies highlights that it is possible to rigorously evaluate such programmatic design decisions at low cost using experimental and quasi-experimental methods.