Incentives and performance in public service

delivery

Oriana Bandiera, LSE

SITE Conference on Public Sector Effectiveness

Stockholm, December 2017

Selection and motivation in public service delivery

• Individuals sort into jobs according to their preferences,

skills, and the jobs’ own attributes (Roy 1951)

• Recent theory (Akerlof and Kranton 05, Besley and Ghatak

05) and survey evidence suggest that:

• individuals who sort into public service jobs have

stronger pro-social preferences

• these jobs tend to have low material incentives

Do incentives crowd out pro-sociality?

Pro-social preferences and material incentives both align

agents’ interests with the principal ⇒ negatively

correlated in equilibrium

Yet, the correlation is often taken as evidence that

offering more generous rewards would:

worsen the performance of existing workers by crowding

out their pro-social motivation

attract agents with weak pro-social preferences who perform

poorly on non-incentivised dimensions

This is often used to justify keeping public sector pay low

Yet, incentives improve performance

In Ashraf et al (15) we design an experiment to test

crowd-out directly in the context of public health:

We measure pro-social motivation with a lab game

We then test whether agents with higher motivation

perform worse if offered incentives

We find crowding in, that is, more pro-social agents

respond *more* to both financial or social rewards

RCT evidence in education and health in LICs show large and

sustained improvement in performance

Muralidharan&Sudaraman 11, Duflo et al 12, Miller et al 12,

Olken et al 12)

and actually crowd in prosocial motivation

Selection experiments are rarer

Dal Bo et al (15) randomise wage offers for a civil

service position in Mexico and find that higher wages

attract better qualified applicants with the same PSM

(Perry)

but maybe once on the field they will underperform?

Deserranno (17) shows that earnings can act as a signal

for the nature of the job when this is uncertain (in her

case hybrid sales+health promotion job)

but will this be relevant for standard civil service

positions?

We should look on the extensive margin

Context: rural Zambia, hard to fill positions in remote

locations, common to all SSA

• In 2010 MoH launched a new program: the CHA

• Meant to address shortages in rural areas by

formalising community health workers positions

• Career advancement (salary progression) within the civil

service can, but does not have to, be used as incentive

• “What will happen now that they see themselves as

civil servants? will they retain their connection to the

community?” (Mr Mwila, MOH HR director, 6/ 2010)

We run a nationwide nurse recruitment experiment

The experiment

• Test how career incentives affect (i) who applies to

public health jobs (ii) who is selected and (iii) their

performance through selection

• Key challenge: identify selection effects (frommotivation on the job)

Identification strategy

• New cadre, job attributes unknown to potential applicants

• Identification strategy:

• vary career incentives when recruiting agents

• [opens selection channel]

• provide the same incentives to all agents once hired

• [shuts down effort channel].

Experimental design

First phase of CHA program: recruit 2 CHAs from 165

communities in 48 (out of 58) districts

Experimentally vary the salience of career and social

benefits by means of different recruitment posters at

the district level

Experimental design

Randomized at district level across the country (48

districts), stratified by province & rate of high school

attainment

Yields balanced sample ⇒ CHA applicants in two

treatments are drawn from similar areas, to work in

similar areas

Same eligible population

– 4% eligible, of which 13% unemployed, 8%

housework, 30% self-employed (mostly farming), 34%

employees

Context map

Control

REPUBLIC OF ZAMBIA

MINISTRY OF HEALTH

ONE-YEAR COURSE IN COMMUNITY HEALTH

The Ministry of Health of the Republic of Zambia is launching a new national Community Health Worker (CHW) strategy and invites

applicants to participate in the inaugural training of community health workers.

The training will begin on 30th August 2010 and will be held at the Provincial level for selected applicants. All participation costs,

including transportation, meals and accommodation will be covered by the Ministry of Health.

BENEFITS:

Learn about the most important health issues in

your community

Gain the skills you need to prevent illness and

promote health for your family and neighbors

Work closely with your local health post and

health centre

Be a respected leader in your community

QUALIFICATIONS:

Zambian National

Grade 12 completed with two “O” levels

Age 18-45 years

Endorsed by Neighborhood Health Committee

within place of residence

Preference will be given to women and those

with previous experience as a CHW

APPLICATION METHOD:

Submit to the DESIGNATED HEALTH CENTRE

indicated above:

Completed application form with necessary

endorsements. If no blank forms are attached to

this notice, kindly obtain a blank one at the

nearest health centre.

Photocopy of school certificate documenting

completion of Grade 12 and two “O” levels.

Photocopy of Zambian national registration card.

For more information: Contact the designated health

centre indicated above.

CLOSING DATE: 30th JULY 2010. Only shortlisted candidates will be contacted for interview.

TRAINING OPPORTUNITY

DESIGNATED HEALTH CENTRE: FOR POSTING AT:

Form RP-C

Treatment

REPUBLIC OF ZAMBIA

MINISTRY OF HEALTH

ONE-YEAR COURSE IN COMMUNITY HEALTH

The Ministry of Health of the Republic of Zambia is launching a new national Community Health Worker (CHW) strategy and invites

applicants to participate in the inaugural training of community health workers.

The training will begin on 30th August 2010 and will be held at the Provincial level for selected applicants. All participation costs,

including transportation, meals and accommodation will be covered by the Ministry of Health.

BENEFITS:

Become a highly trained member of Zambia’s

health care system

Interact with experts in medical fields

Access future career opportunities including: o Clinical Officer o Nurse o Environmental Health Technologist

QUALIFICATIONS:

Zambian National

Grade 12 completed with two “O” levels

Age 18-45 years

Endorsed by Neighborhood Health Committee

within place of residence

Preference will be given to women and those

with previous experience as a CHW

APPLICATION METHOD:

Submit to the DESIGNATED HEALTH CENTRE

indicated above:

Completed application form with necessary

endorsements. If no blank forms are attached to

this notice, kindly obtain a blank one at the

nearest health centre.

Photocopy of school certificate documenting

completion of Grade 12 and two “O” levels.

Photocopy of Zambian national registration

card.

For more information: Contact the designated

health centre indicated above.

CLOSING DATE: 30th JULY 2010. Only shortlisted candidates will be contacted for interview.

TRAINING OPPORTUNITY

DESIGNATED HEALTH CENTRE: FOR POSTING AT:

Form RP-T

Career advancement = salary increase (CHA=$290, Nurse= $530, EHT=$615, doctor=$1625)

Part I: Sorting and Selection

(the prequel)

If hired an applicant will get utility U=M+sH(a), where

M=material benefits

H= public health output

a= ability (cognitive & non-) H’>0

s= prosociality

Thus U is increasing in a,s

Assume cov(a,s)=0 in the population

his outside option in the private sector is V(a), V’>U’>0

V’>U’ (reward to talent higher in the private sector)

Is there a trade-off between talent and pro-sociality?

A candidate will apply if U>V

a

V(a)

U(a)

a’

U, V

agents with a<a’ will apply

The threshold is increasing in s

a

U(s1)

U(s2)

a(s1) a(s2)

U, V

V(a)

even though (a,s) are not correlated in the population

higher ability applicants are more prosocial

The application frontier

a(s) st U(a(s))=V(a(s))

a

M/b

The figure is drawn under the assumption that U=sW+M and V=ba

U>V, apply

U>V, do not apply

s

The effect of increasing M

increasing M

s

a

common support linea(s=1, M=MC)

The effect on prosociality depends on ability

increasing M

s

a

common support linea(s=1, M=MC)

prosociality is lower for inframarginal applicants

prosociality is higher for marginal applicants

Crowd- out?

o for all levels of ability in the common support, increasing M attracts less pro-social applicants

o but increasing M attracts more talented applicants

o thus the marginal applicant will be more pro-social

o effect on average applicant is ambiguous

o effect on hired applicant depends on the selection mechanism

o we analyse this next

CHA inputsfacility

utilisation

health

outcomes

treatment

applicants

CHAs

treatment

applicants

CHAs

new data on the universe of applicants

1585 applicants: skills, pro-sociality, social connections

161 selection panels: composition, ranking of every applicant

Measuring social preferences

o “Adapted Inclusion of Others in Self (IOS) scale”

(Overlapping circles): measures the extent to

which individuals perceive community and self-

interest as overlapping (Aaron et al 1992)

o Plans to remain in the community

IOS Scale

grade 12 scores

the number of courses taken in biology and other natural

sciences

career motivation

next TE on the applicant pool

Measuring skills

TE on the pro-sociality of the applicants is negative only

at low ability levels

prosociality pink line is treatment effect by skill rank

low ability applicants are less pro-social in T

high ability applicants are equally pro-social in T

TE on applicants skills is positive or nil

skill

pink line is treatment effect by skill rank

=1 if

selected p-value

=1 if

selected p-value

=1 if top 3 in skills X treatment 0.121*** 0.158***

(0.0287) (0.0351)

=1 if top 3 in skills X control 0.122*** 0.128***

(0.0374) (0.0391)

=1 if top 3 pro-sociality X treatment 0.0952** 0.0810*

(0.0386) (0.0408)

=1 if top 3 pro-sociality X control 0.0576* 0.0560

(0.0291) (0.0341)

=1 if aims to higher rank X treatment 0.0973** 0.0933**

(0.0410) (0.0378)

=1 if aims to higher rank X control 0.0698** 0.0654*

(0.0311) (0.0335)

=1 connected to village leader X treatment 0.00983

(0.0389)

=1 if connected to village leader X control 0.0283

(0.0267)

=1 connected to health centre staff X treatment -0.0383

(0.0676)

=1 if connected to health centre staff X control -0.0009

(0.0395)

0.62

0.68

0.98

0.4

0.57

0.54

0.63

0.59

Panels face different pools but value the same traits:

choose most talented, and hence most prosocial

TE on applicants: lower pro-sociality, higher skills

treatment control

Cognitive skills

random draw: median 24.9 > 23

Pro-sociality

random draw: median 2.45 < 2.54

TE on hired candidates: same pro-sociality,

higher skills

treatment control

Cognitive skills

panel selection 27.2 > 25.6

random draw: median 24.9 > 23

Pro-sociality

panel selection 2.55 = 2.55

random draw: median 2.45 < 2.54

Higher (lower) sensitivity of U to prosociality (ability)

implies that the marginal applicant will have the highest

ability AND highest pro-sociality

Treatment thus attract two groups of agents who would

have not applied otherwise

high ability/high prosociality

low ability/ low prosociality

In line with common concern: treatment attracts “the

wrong”/low prosociality applicants

but the concern is moot as they will not be selected

Taking stock on the elusive trade-off

CHA inputsfacility

utilisation

health

outcomes

treatment

better applicants

better

CHAs

Part II: Treatment Effect on

Performance

CHA inputsfacility

utilisation

health

outcomes

data

HH visits

Community meetings

HP records

Births

ANC

Vaccinations

Health practices

Anthropometrics

electronic platform + admin

MOH admin Own HH survey

Household visits: Context

CHAs work in remote, low-density area; median 78

square km area has 200 households

CHAs either walk or use bikes

Roads are bad: 10km take between 1.5 hours and

4.5 hours to traverse on bike

Step 1: Treatment agents do 31% more visits

40

Do career CHAs underperform on other tasks or other

dimensions?

Fewer meetings?

Fewer patients at HPs?

More likely to drop out?

Shorter visits?

Focus on easy-to-reach households?

Worse targeting within households?

Less responsive to emergencies?

Work shorter hours/devote less time to “informal” tasks?

41

Do career CHAs underperform on other tasks or other

dimensions?

Fewer meetings? actually twice as many

Fewer patients at HPs? no

More likely to drop out? no

Shorter visits? no

Focus on easy-to-reach households? no

Worse targeting within households? no

Less responsive to emergencies? no

Work shorter hours/devote less time to “informal” tasks?

no

42

Step 2: facility utilisation

CHAs' main remit is mother and child health, encourage:

institutional deliveries & regular checks for children and

immunisations

Using admin data we show that career CHAs:

⇑ Institutional deliveries by 30%,

⇑ children visits by 24%

⇑ children weighted by 22%

⇑ polio vaccination by 20%

43

Step 3: health outcomes

Information

Dependent variable

% of correct

answers in

medical

knowledge test

=1 if child

under 2 yr

old is

breastfed

=1 if child's

stool are

safely

disposed

number of

deworming

treatments

=1 if child

exposed to

CHA is on

track with

immunization

schedule

Career incentives 0.002 0.051** 0.121*** 0.225* 0.047**

(0.010) (0.023) (0.039) (0.129) (0.020)

household controls yes yes yes yes yes

child controls no yes yes yes yes

Mean of dep var in control .740 .641 .595 1.44 .058

Adjusted R-squared 0.057 0.561 0.161 0.263 0.024

N 738 613 736 659 462

Health practices

44

Bottom line: malnourishment falls by 25%

Dependent variable

=1 if weight for

age z score <2

SD (moderately

or severely

undernourished)

=1 if weight for

age z score <3

SD (severely

undernourished)

=1 if

MUAC<12.5

(moderately

or severely

wasted)

=1 if

MUAC<11.

5 (severely

wasted)

Career incentives -0.053* -0.028* -0.023 -0.014

(0.030) (0.015) (0.015) (0.014)

household controls yes yes yes yes

child controls yes yes yes yes

Mean of dep var in control .210 .051 .036 .014

Adjusted R-squared -0.006 0.003 0.018 0.017

N 582 582 581 581

Anthropometrics

45

Plan

more

inputs

more

instdeliveries

25% lower

malnutrition

treatment

better

applicants

better CHAs

Incentives affect selection both by changing the applicant

pool and the chosen agents

In line with common wisdom, offering material benefits

attract low prosociality agents but this is moot because

these have low ability and are not hired

Holds as long as (i) return to ability is higher in the private

sector and (ii) return to prosociality higher in public

More to gain where returns to ability are larger

there’s no tradeoff between talent and prosociality

Lessons for export