Tarvid Completes Analysis on Price Elasticity of Health Services

Starting with 30+ monthly reports from 300+ NGO clinics in Bangladesh, I extracted 250,000+ price/quantity observations including 3000 prices changes and almost as many estimates of price elasticity.

The original data was an SPSS data set containing 10,367 monthly reports with 231 "variables". The data was converted to MySQL, 29 price-quantitiy pairs were identified and a PHP script was written to "pivot" the data into the form NGO, Clinic, Service, MonthYr, Price and Quantity. This data set was then scanned for price changes using a sliding and adjustable time window. From these price changes, 2,859 estimates of price elasticity were obtained making this one of, if not the largest study of its kind.

Health service prices are modest in Bangladesh in spite of widespread poverty and in comparison to third world standards. Plus, there is a practice which allows clients to declare themselves "poor" and permits service providers to reduce or waive prices altogether. Details await publication of the report, but I can reveal that quantity was remarkably insensitive to price, contrary to prevailing opinion. The most negatively affected group were children.

The conclusion is that rational pricing can improve cost recovery and extend coverage.

More information may be obtained from the author.