An Alternative Subsidy: Improving Health Outcomes through Non-Monetary Costs

  • Kinnan, Cynthia Georgia (PD/PI)

Project: Research project

Project Details

Description

The objective of the proposed research is to compare an alternative type of subsidy, free distri-
bution coupled with a non-monetary price, to monetary subsidies. The usual (monetary) price
system allocates goods to those with the highest willingness to pay. However, the presence of labor
market frictions and binding credit and savings constraints likely lowers consumers' willingness
to pay relative to their willingness to pay in the absence of these constraints. In the presence of
binding constraints, the price system will not necessarily allocate limited resources to those with
the highest unconstrained willingness to pay. This di�erence between constrained willingness to
pay and unconstrained willingness to pay would explain the steep drop-o� in demand for increasing
monetary prices, but would not be expected to a�ect demand with respect to non-monetary prices.
StatusFinished
Effective start/end date1/1/1312/31/13

Funding

  • Russell Sage Foundation (RSF Project #: 98-13-04)

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