Information and subsidies: Complements or substitutes?

Does providing information about a product influence the impact of price subsidies on purchases? This question is particularly relevant for health products in developing countries where both informational campaigns and price subsidies are common policy instruments. We conduct a field experiment in Zambia and find that providing information about a new version of a product significantly increases the impact of price subsidies on take-up. Taken alone, the information manipulation has no significant impact on demand while the price subsidy substantially increases demand. However, the evaluation of either intervention in isolation fails to capture the significant complementarity between the two.

► We test the interaction of information and subsidies for a health product in Zambia.
► Taken alone, information does not affect demand while the subsidy increases demand.
► Information about the product increases the impact of the subsidy on take-up.
► The observed complementary has implication for the roll-out of new health products.