Daily Tao – Poor Economics – 3

Since they do not seem to be willing to sacrifice much money or time to get clean water, bed nets, or for that matter, deworming pills or fortified flour, despite their potentially large health benefits, does that mean the poor do not care about health? The evidence suggests the opposite. When asked whether there was a period of a month in the recent past when they felt “worried, tense, or anxious,” roughly one-fourth of the poor in both rural Udaipur and urban South Africa said yes. This is much higher than what we see in the United States. And the most frequent source of such stress (44 percent of the time in Udaipur) is their own health or that of their close relatives. In many of the countries in our eighteen-country data set, the poor spend a considerable amount of their own money on health care. The average extremely poor household spends up to 5 percent of its monthly budget on health in rural India, and 3 percent to 4 percent in Pakistan, Panama, and Nicaragua. The issue is therefore not how much the poor spend on health, but what the money is spent on, which is often expensive cures rather than cheap prevention. To make health care less expensive, many developing countries officially have a triage system to ensure that affordable (often free) basic curative services are available to the poor relatively close to their homes.

The benefits of preventive healthcare is not as salient as that of reactive measures. The fact that the poor might not take the most rational actions towards their own healthcare might not be attributed to the fact that they do not care, but simply that they follow the same heuristics that humans do.

Preventing issues like malaria can be cheap and super cost efficient, but the benefits of these are not as apparent as compared to getting treated afterwards. Thus, they might not necessarily choose to invest in getting preventive healthcare measures when these returns appear arbitrary. What is needed is to be able to nudge and make these preventive measures the default option in policies.

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