Microloans, Bednets and Malaria: Evidence from a Randomized Controlled Trial in Orissa

Principal Investigators: Alessandro Tarozzi (Duke U.), Aprajit Mahajan (Stanford U.), Brian Blackburn (Stanford U.), Dan Kopf (CMF), Lakshmi Krishnan (CMF), Joanne Yoong (RAND)
Research Team: Dan Kopf (CMF), Lakshmi Krishnan (CMF)
LEAD Centre: Centre for Microfinance
Focus Area: Credit plus
Project Geography: Orissa, India
Partner: BISWA
Status: Completed


The development field has witnessed a spirited debate over the optimal pricing of health goods and services. Given that price remains a significant barrier to adoption, some policymakers argue, health goods organizations should distribute health goods for free in order to achieve high takeup and usage. Others maintain that charging for a good is the best policy choice because it both helps select out only those who are likely to use the product and makes it more likely that beneficiaries will use the good.

Insecticide treated bednets (ITNs), designed to help protect against malaria, have been at the centre of this debate on the pricing of health goods, with some experts advocating free distribution and others championing price-sharing between distributing agencies and the beneficiary. Recent academic work suggests that free distribution may be more effective than charging for nets. But this option could be prohibitively expensive for some organizations. In this study, researchers explore a third option: offering nets on microcredit. This distribution scheme could allow poor families with lower incomes to pay for a beneficial product over time rather than in one lump sum, a payment schedule that may better match their cash flows.

The present study, conducted in a malaria-endemic part of Orissa, attempts to gauge the impact of two different distribution schemes: free distribution and offering nets on microcredit loans on the adoption and usage of insecticide treated nets. The study also examines the impact of ITN distribution on health outcomes.


The study was conducted in partnership with Bharat Integrated Social Welfare Agency (BISWA), a microcredit provider operating in rural Orissa. Researchers randomly selected 141 villages in a malaria-prone area of rural Orissa for participation in the study. A third of the 141 villages were randomly selected to be control villages and two-thirds of the 141 were selected for the treatment group. Researchers evenly divided the treatment group into two smaller groups: one group of villages where households received bednets for free and another group of villages where households received the offer to buy ITNs on contract. Researchers targeted approximately 15 randomly-selected households in each treatment and control village for the intervention.

Because ITNs need periodic insecticide retreatment to work optimally, researchers presented treatment households with the option to retreat the nets 6 months and 12 months after the initial purchase. They offered all households purchasing ITNs two types of contracts: one which would allow them to commit to future insecticide retreatment by purchasing retreatments upfront and another which allowed them to purchase insecticide retreatment six or twelve months after purchasing the net (at the time of recommended retreatment). Households in the free distribution villages were retreated for free at the same intervals.


Offering ITNs on credit helped increase the usage and uptake of insecticide nets. In the villages where households were offered the microcredit repayment option, nearly 52% of households purchased an ITN, a surprisingly large number given that the nets were offered at full price.

With respect to usage, those who received nets for free used them more than those who purchased their nets on a microloan contract or those in control. In free distribution villages, nearly 47% of households had used a net the previous night compared to a 16% usage rate for households that had purchased nets on credit.

Researchers found a difference between the retreatment rates for people who received nets for free, people who chose the commitment contract and people who were offered the non-commitment contract. The free group had the highest retreatment rates while the group that purchased retreatment upfront also chose to retreat their nets in high numbers. The group was offered retreatments for cash had the lowest retreatment rates.

The study found almost no difference in malaria prevalence and other health indicators between individuals in the free distribution villages, microcredit villages and those in the control villages – the program did not reduce the incidence of malaria. Researchers hypothesize that the negligible impact of the program on health indicators is attributable to the fact that the program did not provide enough coverage to create a mosquito-free environment nor did it include a heavy monitoring component, essential elements of past ITN interventions that have had a noticeable impact on health.

Policy Implications

•     Offering health products on microcredit may be an effective way of boosting product usage and takeup but may not be ideal for products that require high takeup in order to work. Since ITNs work largely through creating a mosquito-free environment and not through the physical protection effect, they should be distributed in a way that maximizes coverage. However, microfinance organizations should consider offering their customers the chance to purchase health products that do not need high coverage or intense monitoring to be effective on microcredit.
•     The difference between retreatment rates for the two contract types: commitment and non-commitment suggest that organizations offering health products which require retreatment or future purchases should build in the costs of future treatments upfront to maximize effective usage.
•     Researchers should partner with other microcredit providers to explore whether offering health products on microcredit contracts can help boost their takeup, usage and effectiveness.

Related Resources
WORKING PAPER – Micro loans, Bednets and Malaria: Evidence from a Randomized Controlled Trial in Orissa
POLICY MEMO – Micro loans, Bednets and Malaria: Evidence from a Randomized Controlled Trial in Orissa
CASE STUDY – Fighting Malaria with Microfinance: BISWA (October 2008)