Most of the world’s poorest people secure access to essential services
by paying for them and thus are in a ‘market,’ whether the services are
provided in the public or private sectors. Even the poorest are making
payments through these markets. The parties to these transactions are
unequal in the knowledge needed to make good decisions, however, with
negative consequences for quality. These information asymmetry problems
are particularly acute in undergoverned countries, where state
regulation and direct service delivery are weak. In these settings it is
particularly important to find locally appropriate institutions that
will assist service users to use the market to stimulate quality as well
as quantity from practitioners.
Through a systematic review of literature reviews, this article examines the evidence on solutions to
these problems in a variety of professions serving the poor - in
agriculture, education, veterinary medicine and especially health - and
finds that there are many commonalities in successful institutions
between them. The authors conclude that direct payments by clients are more
likely to have a positive effect on quality if they are deconcentrated
to locally-managed organisations rather than to individual
practitioners, particularly if those organisations have an
institutionalised history of other - regarding values and incorporate
client participation. The likelihood of social institutions that
mitigate inequalities in knowledge about the quality of services
increase with GNP per capita, education, good governance, and ‘social
capital’ while they decrease with inequality and patronage. Because of
societal variation in the prevalence of these attributes as well as
cultural and political heritage, solutions to the asymmetric information
problem generally are country specific.
This paper is based on a modified systematic review of surveys of the
literatures on mechanisms and institutions of professional service
delivery in 4 sectors of low and middle income countries.
This article is an expanded version of an article with the same title and authors published in the
journal World Development.
Leonard, D.K.; Bloom, G.; Hanson, K.; O’Farrell, J.; Spicer, N. Institutional Solutions to the Asymmetric Information Problem in Health and Development Services for the Poor. IDS, Brighton, UK (2013) 56 pp.