Willingness to Pay for Long-Lasting Insecticide Treated Bednets: A Discrete Choice Experiment with Real Payment in Ghana

Tuesday, June 25, 2019: 9:00 AM
Johnson - Mezzanine Level (Marriott Wardman Park Hotel)

Presenter: Y. Natalia Alfonso

Co-Authors: David Bishai; Matthew Lynch; Elorm Mensah; Danielle Piccinini

Discussant: Jessica Cohen

Introduction: The expansion of long lasting insecticide nets (LLINs) is difficult due to limited government and donor financial resources. Commercial private markets could play a larger role in the continuous distribution of LLINs by offering bed nets with features that are most highly valued among middle-income populations living in malaria prone regions. This could take some of the financial pressure off of governments who could then focus resources to offer protection to those who cannot afford commercially sold products. Given a backdrop of subsidized undifferentiated LLINs available for free in both rural and urban areas, bed net firms contemplating market entry would need to gain confidence that they could derive revenue from a more user friendly commercially sold LLIN. Methods: This study conducted a discrete choice experiment (DCE) followed by a real payment choice among a representative sample of 628 middle-income households living in malaria prone regions in Ghana to better understand the demand for LLINs with add-on features. Participants were given a cash payment that they could either keep or spend on one of the LLIN products that they stated a willingness to purchase. We compare the stated preference to revealed preference and use the results to simulate sales under alternative scenarios of private sector entry into bed net sales in Ghana to compute the public costs and coverage outcomes under scenarios with and without the private LLIN market conforming to the WTP estimates. Results: Results show that the sample households had an average probability of purchase of 43.8% (S.D. 0.07) and the average purchaser’s WTP for a LLIN with add-on features was $7.48 (GHS 34.0). Stated preference demand results for LLINs with add-on features are significantly larger than the revealed preference demand results for non-differentiated bednets from market household observational data, which showed that only 29% and 14% of households owned and used a bed net, respectively, and out of the owners, only 2% purchased them (for $5.5 or GHS24) while the remaining 98% got them for free. The average WTP for a LLIN with all the preferred features was $18.48 (GHS 84). Simulation results show that among the 1.7 million middle-income households living in malaria prone areas in Ghana, the public sector outlay could be reduced by 64% from $5.2 million to $1.8 million and private LLIN sales would generate $5.3 million in revenue (or $312 per every 100 households in the study area) that would support jobs for Ghanaian retailers, distributors, and producers of LLINs. Conclusion: Our results support a scenario in which commercial markets for LLINs could play a significant role in improving access to LLINs for middle-income Ghanaians prone to malaria. Manufacturers interested in making differentiated bed nets should focus their LLIN designs to maintain a retail price that could yield sufficient economic return and offer features that are most highly valued among middle-income households living in malaria prone regions in Ghana.

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