The core theory of behavior in Economics, which structures inquiry and provides a framework for empirical analysis, is largely responsible for the success of the discipline. Behavioral Economics (BE) challenges this theory, but has failed to provide a coherent alternative. Consequently the influence of BE has been limited. In what follows we argue that Evolutionary Psychology (EP), suitably adapted, can provide at least a partial foundation for BE. Its methods offer a way of generating theories of the origins of anomalous behaviors and of testing those theories. I. Behavioral Economics BE has been most successful in documenting failures of the rational actor model (e.g. failures of expected utility theory, irrational cooperation, and time inconsistent preferences). However, attempts to incorporate these observations into theory have been ad hoc: either an anomalous behavior is induced by modifying the utility function or the behavior is simply assumed and implications derived. The lack of theoretical foundations causes a number of problems for BE. First, empirical analysis can show the inadequacy of mainstream theory, but it does little to help develop alternatives. Second, without a

It is often argued that cost-sharing-charging a subsidized, positive price-for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prenatal clinics could sell long-lasting antimalarial insecticide-treated bed nets (ITNs) to pregnant women. We find no evidence that cost-sharing reduces wastage on those who will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that cost-sharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the average prenatal client in the area in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by sixty percentage points when the price of ITNs increases from zero to $0.60 (i.e., from 100% to 90% subsidy), a price still $0.15 below the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of the impact of ITN prices on child mortality that incorporates both private and social returns to ITN usage. Overall, our results suggest that free distribution of ITNs could save many more lives than cost-sharing programs have achieved so far, and, given the large positive externality associated with widespread usage of ITNs, would likely do so at a lesser cost per life saved. (c) 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

Maternal and neonatal mortality rates in the slums of Nairobi, Kenya are among the highest in the world. Mounting evidence suggests that delivering in a facility is not enough to ensure mortality reductions: women must deliver in high-quality facilities and arrive early enough for appropriate care if complications arise. We designed an RCT combining labeled cash transfers and pre-commitment incentives to encourage earlier and more effective delivery facility choice and to promote earlier facility arrival. We find that the intervention improves planning, increases delivery at the desired facility, and encourages more timely arrival at delivery facilities.

Both under- and over-treatment of communicable diseases are public bads. But efforts to decrease one run the risk of increasing the other. Using rich experimental data on household treatment-seeking behavior in Kenya, we study the implications of this trade-off for subsidizing life-saving antimalarials sold over-the-counter at retail drug outlets. We show that a very high subsidy (such as the one under consideration by the international community) dramatically increases access, but nearly one-half of subsidized pills go to patients without malaria. We study two ways to better target subsidized drugs: reducing the subsidy level, and introducing rapid malaria tests over-the-counter.