Preference Heterogeneity in the Structural Estimation of Efficient Pigovian Incentives for Insecticide Spraying to Reduce Malaria

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2017-01-18

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Abstract

This paper bridges the theoretical and empirical literatures on the role of preference heterogeneity in characterizing externalities related to disease transmission. We use a theoretical structure similar to locational sorting models, which characterize equilibria in terms of marginal individuals who are indifferent between locations. In our case, the ‘locations’ are binary, consisting of whether or not to take a discrete preventative action. Individual heterogeneity arises in this structure due to variation in the costs and disutility associated with prevention. We demonstrate application of this approach in the context of participation in insecticide-based indoor residual spraying programs for malaria control in northern Uganda. We identify the parameters of our theoretical model using a stated preference choice experiment combined with estimates from published epidemiological studies. The model implies that Pigovian subsidies for participation in this context should decrease household malaria risk by 19–25%. Our approach can be applied to other bioeconomic externalities with spillovers from discrete preventative actions, including agricultural pest management and the control of pest infestations and invasive species.

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10.1007/s10640-017-0115-x

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Brown, ZS, and RA Kramer (2017). Preference Heterogeneity in the Structural Estimation of Efficient Pigovian Incentives for Insecticide Spraying to Reduce Malaria. Environmental and Resource Economics, 70(1). pp. 169–190. 10.1007/s10640-017-0115-x Retrieved from https://hdl.handle.net/10161/24532.

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Kramer

Randall Kramer

Juli Plant Grainger Professor Emeritus of Global Environmental Health

Before coming to Duke in 1988, he was on the faculty at Virginia Polytechnic Institute and State University. He has held visiting positions at IUCN--The World Conservation Union, the Economic Growth Center at Yale University, and the Indonesian Ministry of Forestry. He has served as a consultant to the World Bank, World Health Organization and other international organizations. He was named Duke University's Scholar Teacher of the Year in 2004.

Kramer's research is focused on the economics of ecosystem services and on global environmental health. He is currently conducting a study on the effects of human land use decisions on biodiversity, infectious disease transmission and human health in rural Madagascar. Recent research projects have used decision analysis and implementation science to evaluate the health, social and environmental impacts of alternative malaria control strategies in East Africa. He has also conducted research on health systems strengthening, economic valuation of lives saved from air pollution reduction. and the role of ecosystems services in protecting human health.


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