How RCTs Work?

♤ For instance, if one wanted to understand whether providing a mobile vaccination van and/or a sack of grains would incentivise villagers to vaccinate their kids, then under an RCT, village households would be divided into four groups A, B, C and D.

Is there a flip side to RCTs?

♤ Randomly assigning people or households makes it likely that the groups are equivalent, but randomisation “cannot guarantee” it.

♤ So, one group may perform differently from the other, not because of the “treatment” that it has been given, but because it has more women or more educated people in it.

♤ Also, RCTs do not guarantee if something that worked in Kerala will work in Bihar, or if something that worked for a small group will also work at large scale.

o Group A would be provided with a mobile vaccination van facility,

o Group B would be given a sack of food grains,

o Group C would get both, and

o Group D would get neither.

♤ Households would be chosen at random to ensure there was no bias, the groups are equal,

and that any difference in vaccination levels was essentially because of the “intervention”.

♤ Group D is called the “control” group while others are called “treatment” groups.

♤ Such an experiment would not only show whether a policy initiative works, but would also provide a measure of the difference it brings about.

♤ It would also show what happens when more than one initiatives are combined. This would help policymakers to have the evidence before they choose a policy.

Some studies using RCTs

♤ On vaccination:

o Problem: Low service quality one reason why poor families invest so little in preventive measures. For example, the staff at the health centres that are responsible for vaccinations are often absent from work.

o Solution: Mobile vaccination clinics, where the care staff were always on site – could fix this problem. Vaccination rates tripled in the villages that were randomly selected to have access to

these clinics, at 18 per cent compared to 6 per cent.

o This increased further, to 39 per cent, if families received a bag of lentils as a bonus when they vaccinated their children.

o Because the mobile clinic had a low level of fixed costs, the total cost per vaccination actually halved, despite the additional expense of the lentils.

♤ On education:

o Problem: In many poor country’s schools, curricula and teaching do not correspond to pupils’ needs. There is a high level of absenteeism among teachers and educational institutions are generally weak.

o Solutions: Reason for high level of absenteeism was lack of clear incentives and accountability for teachers. One way of boosting the teachers’ motivation was to employ them on short-term contracts that could be extended if they had good results.

o Experiments found that pupils who had teachers on short-term contracts had significantly better test results, but that having fewer pupils per permanently employed teacher had no significant effects.

o Studies suggested that additional resources are, of limited value whereas, targeted support for weak pupils had strong positive effects, even in the medium term.

♤ On health subsidy:

o Question: Whether medicine and healthcare should be charged for and, if so, what they should cost?

o Experiment: A field experiment showed how the demand for deworming pills for parasitic infections was affected by price. They found that 75 per cent of parents gave their children these pills when the medicine was free, compared to 18 per cent when they cost less than a US dollar, which is still heavily subsidised.

o Inference: Poor people are extremely price-sensitive regarding investments in preventive healthcare.