Description:

Speaker: Zincy Wei

Title: The Economics of Choosing Traditional Medicine: Evidence from a Field Experiment in India

Abstract: Traditional medicine is widely used in low- and middle-income developing countries, despite limited medical evidence supporting its effectiveness compared to modern medicine. What are the economic determinants and market failures of choosing traditional medicine? I study these questions in the context of India, with large social welfare impact and well-established modern pharmaceutical and traditional medicine industries. First, I design a field survey and document three key facts: 1) patients who using traditional medicine for chronic conditions elicit low willingness to switch to modern medicine (less than 7%); 2) which is driven by persistent beliefs in efficacy rather than information limitation or price sensitivity; and 3) these patterns hold across social-economic strata. Motivated by these facts, I then conduct a randomized controlled trial (RCT) targeting individuals at high risk for hypertension and with a history of using traditional medicine for non-chronic conditions. The experiment tests two interventions: 1) providing medical literacy information, and 2) providing cost coverage for initial modern medicine take-up.  Preliminary results show that information interventions are more effective than financial incentives. This suggests that the timing of acquiring new information - before patients fully committed to either treatment - is critical for healthcare demand and medical decision-making. Overall, this paper provides insights into designing early stage, cost-effective healthcare policies to overcome market failures of over-utilization of traditional medicine, which can be applied in, but not limited to developing countries.