Designing Incentives to Combat Urban Diabetes

Diabetes and diabetes-related complications have reached epidemic levels in urban India. A promising strategy for local governments to reduce the financial and physical burdens of diabetes is to encourage better disease management by patients. Disease management may be particularly poor among impatient people, since the costs of management (e.g., exercising more) are borne today but the benefits are realized in the future. Thus, offering financial rewards for healthy behaviors may be a potent tool for improving disease management. However, it is not well understood how to optimally design incentives for impatient agents. Two key aspects of the incentive design (the lag between incentivized behavior and payment, and whether the contract is additively separable across days) should theoretically interact with time preferences. Based on these interactions, the researchers have developed new insights for how to structure contracts to overcome the behavioral biases preventing healthy behaviors. This project will conduct a randomized evaluation of different incentive schemes for diabetics, varying lag length and additive separability, to evaluate what incentive scheme works best and how incentive effectiveness varies by individual time preferences. The project will also assess whether input or outcomes incentives are more effective. Researchers are measure impacts on health outcomes like blood sugar control and BMI, as well as the persistence of the impacts.