Money for Nothing ? The E ect of Financial Incentives on E orts and Performances in the Health Sector *

Financial incentives for service providers are increasingly used in developing countries as a tool to maximize the e ort and output of public good providers. Using a eld experiment in the Democratic Republic of Congo, we evaluate the impact of a fee-for-service mechanism aimed to increase health service utilization by the population. We nd that, relative to xed payments, the fee-for-service mechanism did not increase service utilization (the performance criteria), but on the contrary slightly decrease curative and postnatal service utilization as well as newborn health outcomes. We show that these detrimental e ects of incentives do not result from a diminution in workers' e orts, fraud, or switching away from non-incentivized actions. On the contrary, the workers provided more e orts to attract patients as they o ered lower service prices and intensi ed service publicity. But these e orts were evidently misplaced, showing that incentivized workers are not always more productive because they may not understand how to perform. We also show evidence that the incentive scheme increased the weight of external motives relative to intrinsic motives in worker motivation. JEL Codes: H51, I18, 012 *We thank Yann Algan, Elizabeth Beasley, Nicolas de Borman, Julia Cagé, Vera Chiodi, Damien De Walque, Pascaline Dupas, Gyuri Fritsche, Roberto Galbiati, Emeric Henry, Paul Jacob Robyn, Hadia Samaha, Mark Stabile, Hélène Thiollet, and Christel Vermeesch for helpful comments and discussions, as well as Emmanuelle Auriol, Roland Benabou, Denis Cogneau, Marc Gurgand, Guy Laroque, Alice Mésnard, Pieter Serneels, Philippe de Vreyer and numerous seminar participants at the World Bank, EUDN 2013 scienti c conference, Paris School of Economics, Toulouse School of Economics, Sciences Po, Navarra Center For International Development, Journées Louis-André Gérard-Varet 2015, 2015 iHEA World Congress, Paris I University, University of Paris-Dauphine, National University of Singapor, and the Blavatnik School of Government at Oxford University. We wish to acknowledge the support of the World Bank and J-PAL Europe. Jean-Jacques Frère and Hadia Samaha led the implementation of this project and we are grateful to them for their leadership. We thank the Health Authorities of Haut-Katanga and the Health Sector Rehabilitation and Support project (Projet d'Appui à la Réhabilitation du Secteur de la Santé PARSS) in Lubumbahi and Kinshasa for their collaboration. We are deeply indebted to Julie Berthet-Valdois for outstanding project management, and to the Ecole de Santé Publique de Lubumbashi for excellent data collection. We also thank Saidou Ouedraogo for excellent assistance with data entry. Finally, we gratefully acknowledge the sta and patients of the health facilities as well as the households for the time and information they gave. All errors remain our own, and the opinions expressed in this paper are ours alone and should not be attributed to the institutions with which we are associated, the World Bank or the Government of the Democratic Republic of Congo. University of Paris-Dauphine and J-PAL (elise.huillery@dauphine.fr) Sciences Po, LIEPP (juliette.seban@sciencespo.fr)