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Economics of Education Review 37 (2013) 1–12Contents lists available at ScienceDirectEconomics of Education Reviewjournal homepage: www.elsevier.com/locate/econedurevDo you get what you pay for with school-based healthprograms? Evidence from a child nutrition experimentin rural ChinaSean Sylvia a, Renfu Luo b, Linxiu Zhang b,*, Yaojiang Shi c,Alexis Medina d, Scott Rozelle daDepartment of Agricultural and Resource Economics, University of Maryland, Symons Hall, Rm. 2200, College Park, MD 20742, USACenter for Chinese Agricultural Policy, Institute for Geographical Sciences and Natural Resource Research, Chinese Academy of Sciences,No. 11A Datun Road, Chaoyang District, Beijing 100101, PR ChinacSchool of Economics and Management, Northwest University, No. 1 Xuefu Road, Guodu Education and Technology Park,Chang-an District, Xi’an 710127, Shaanxi, PR ChinadFreeman Spogli Institute for International Studies, Stanford University, Encina Hall East, 5th Floor, Stanford, CA 94305, USAbA R T I C L E I N F OA B S T R A C TArticle history:Received 7 October 2012Received in revised form 19 February 2013Accepted 11 July 2013This study uses a randomized controlled trial of a school-based anemia reduction programin rural China to examine how increased school emphasis on health promotion affectsacademic performance. Although education and health promotion are complementaryfunctions of schools, they do compete for finite school resources. We compare the effects ofa traditional program that provided only information about anemia and subsidies to anotherwise identical program that included performance incentives for school principalsbased on school-level anemia prevalence. By the end of the trial, exam scores amongstudents who were anemic at baseline improved under both versions of the program, butscores among students in the incentive group who were healthy at baseline fell relative tohealthy students in the control group. Results suggest that performance incentives toimprove student health increase the impact of school-based programs on student healthoutcomes, but may also lead to reallocation of school resources.ß 2013 Elsevier Ltd. All rights reserved.JEL classification:C93O15I12I21M52Keywords:Economic developmentHuman capitalTeacher salariesResource allocationEducational economics1. IntroductionSchool-based interventions are believed to be amongthe most cost-effective approaches for delivering healthand nutrition services to children in developing countries* Corresponding author. Tel.: 86 010 64889834;fax: 86 010 64856533.E-mail addresses: [email protected] (S. Sylvia),[email protected] (R. Luo), [email protected] (L. Zhang),[email protected] (Y. Shi), [email protected] (A. Medina),[email protected] (S. Rozelle).0272-7757/ – see front matter ß 2013 Elsevier Ltd. All rights 13.07.003(Bundy & Guyatt, 1996; Jukes, Drake, & Bundy, 2008;Orazem, Glewwe, & Patrinos, 2008). Because developingcountry school systems tend to be more developed thanpublic health systems and schools are natural points ofcontact with school-aged children, school systems providea platform from which interventions can be delivered atrelatively low cost (Bundy & Guyatt, 1996; Bundy et al.,2006; Jukes et al., 2008). Since improved health can in turnimprove learning, the benefits of school-based healthprograms also include better related outcomes, such asschooling, that can improve well-being over the life course(Gomes-Neto, Hanushek, Leite, & Frota-Bezzera,1997;

2S. Sylvia et al. / Economics of Education Review 37 (2013) 1–12Orazem et al., 2008; Zhao & Glewwe, 2012; Eide &Showalter, 2011).Despite evidence of their effectiveness, however, weakincentives for educators to improve health may be keepingschool-based health and nutrition programs from reachingtheir full potential. Incentives facing educators in developing countries are often weak in general (cf. World Bank,2004; Chaudhury, Hammer, Kremer, Muralidaran, &Rogers, 2006; Banerjee & Duflo, 2006; Duflo & Hanna,2005). Further, even motivated educators may focus ontraditional responsibilities over health promotion. Although health promotion and education may be complementary functions, they compete for the attention of finiteschool resources. Poor educator incentives for improvinghealth may therefore reduce the ability of school-basedhealth interventions to improve student health outcomesthrough reduced compliance or diversion of resources tomore traditional functions.We conducted a randomized controlled trial (RCT) inrural primary schools in western China to test whetherproviding school principals with pay-for-performance(P4P) contracts tied directly to health outcomes of childrenin their school could increase the effectiveness of a schoolbased anemia reduction program. Schools in the trial wereallocated to either (a) a ‘‘subsidy’’ group in which schoolprincipals were given information about anemia and aschool subsidy to implement an anemia reductionprogram; (b) an otherwise identical intervention thatadditionally provided school principals with a pay-forperformance contract based on school-level anemiaprevalence (henceforth the ‘‘health incentive’’ group); or(c) a pure-control group.Pay-for-performance contracts and other forms ofpayment tied to results – collectively known as ‘‘resultsbased financing’’ – strengthen incentives by shiftingbenefits to agents whose effort contributes to gains in adesired outcome. Such contracts have long been commonplace in private sector companies (e.g., sales commissions),but are now increasingly common in public servicedelivery (Oxman & Fretheim, 2008). In developingcountries, prominent health sector examples includeNGO-contracting in Cambodia that rewards use of healthservices (Bloom et al., 2006; Loevinsohn & Harding, 2005)and paying health facilities based on maternal and childhealthcare outputs in Rwanda (Basinga et al., 2011; Gertler& Vermeersch, 2012). High-powered incentives are alsobeing used to motivate educators – most commonly takingthe form of performance pay for teachers tied to academicachievement (Hanushek & Woessmann, 2011; Woessmann, 2011).In this paper, we focus on the impacts of the twointerventions on academic performance as measured bystudent scores on standardized semester-end exams inmath.1 Our working hypothesis is that the subsidyintervention, through improving student health, will inturn improve student academic performance. We alsohypothesize that the addition of performance incentives1The main results for impacts on anemia are reported in a separatepaper, Miller et al. (2012).will lead to even stronger effects on academic performancedue to larger health gains. On the other hand, it is possiblethat the additional emphasis placed on student health inboth groups could draw attention (resources, time andeffort) away from education due to a multitasking effect(Holmstrom & Milgrom, 1991; Baker, 1992; Baker, 2002).Although health promotion and education are complementary tasks (given the close relationship between good healthand academic performance), they compete for finite schoolresources. While this type of crowding-out of educationalactivities is mostly a concern in the health incentive group, itis also a possibility in the subsidy group.2The questions addressed in this study about theeffectiveness of performance incentives in school-basedhealth programs – and the possibility that they crowd-outeducational activities – have important implications forChina and other countries working to integrate nutritioninto educational policy. With the explicit goal of improvingnutrition among students in rural areas, the Chinesegovernment has announced a nationwide program toprovide rural students with more nutritious school mealsunder the ‘‘Long-term Education Reform and DevelopmentPlan (2010–2020)’’ (Ministry of Education, 2012). Theprogram will initially be implemented as a pilot in 680counties, covering about 26 million children at an annualcost of 16 billion yuan (US 2.5 billion). The majority ofthese funds will be given to schools as subsidies of 3 yuanper student per day (4 yuan per student per day fordisadvantaged rural boarding school students). Chineseschool principals (who have a significant amount of controlover school expenditures) have explicit incentives for goodacademic performance, but preliminary fieldwork suggeststhat they place little emphasis on student nutrition.3 It istherefore unclear whether subsidies to schools alone willbe sufficient to achieve meaningful nutritional gains.Our results also provide insight into the use ofperformance pay in public service organizations moregenerally. A common feature of public organizations is thatthey are often charged with multiple functions or roles,often for which success is not easily measured and thusthey cannot be contracted upon (Dixit, 2002). In such asetting, it is possible that the introduction of performancepay tied to a subset of these functions can refocusresources away from others. School systems are primeexamples of organizations with multiple roles; but ouranalysis speaks to a broader range of public services.The rest of this paper is organized as follows. In Section 2we give background on anemia, its link to educational2Vermeersch & Kremer (2004), for example, find evidence that a mealprogram in Kenyan preschools displaced teaching time by 15% despite acook being hired to manage meal preparation. At the community level,Olken, Onishi, and Wong (2011) find evidence that incentives for healthled to reductions in the provision of educational inputs. They do not,however, find reductions in academic performance and speculate that theprogram led to more efficient input use.3School principals in China face periodic evaluations through the cadreevaluation system (see Whiting (2004)). Although the specific structureof this evaluation varies across locations, these evaluations are oftenbased in part on student performance. In addition, approximately 20% ofthe principals in our sample state that they are eligible for bonus pay tiedto student exam scores.

S. Sylvia et al. / Economics of Education Review 37 (2013) 1–12outcomes, previous studies of efforts to reduce anemiathrough schools and the context in which our experimenttakes place. In Section 3 we describe the experimentaldesign, sampling and the data that we use to evaluate theinterventions. In Sections 4 and 5 we discuss the estimationstrategy and report the effects of the subsidy and healthincentive interventions on student academic performance.We also examine these findings to see which of the two(potentially offsetting) mechanisms discussed above –improved student health or reallocation of resources –appears to have the dominant effect on academic performance. The final section concludes.2. Anemia and education in rural Northwest ChinaIron deficiency is the most common nutritionaldeficiency worldwide (Black, 2003). In more severe cases,iron deficiency leads to anemia, a debilitating conditionestimated to affect up to half of all school-aged children indeveloping countries (Hall et al., 2001). A large body ofliterature links iron deficiency – with or without anemia –to impaired cognition and brain function (Yip, 2001). Morerecently, iron deficiency has also been linked to attentiondeficit hyperactivity disorder (Konofal et al., 2008). Likely aresult of these effects on cognition and behavior, irondeficient school-aged children have also been shown tohave inferior educational outcomes, including grades,attendance and attainment (Nokes, van den Bosch, &Bundy, 1998; Taras, 2005).4Despite rapid economic development and risingincomes in recent years, anemia rates among school-agedchildren in rural China remain stubbornly high. Approximately one third of children in nationally-designatedpoverty counties of Northwest China between ages 8 and12 are anemic (Luo, Wang, et al., 2011; Luo et al., 2010).Iron deficiency anemia can, in principle, be treatedthrough relatively easy, low-cost nutrition interventions.First, greater consumption of meat, green leafy vegetables,and other iron-rich foods (as well as fruits and vegetablescontaining vitamin C, which promotes iron absorption) canbe encouraged. Poor households may be unable toconsume iron-rich foods with regularity, however, dueto their inability to afford the higher priced foods.Second, staples such as flour and soy sauce can befortified with iron. In contrast to the success of fortificationin addressing other micronutrient deficiencies, such as iniodine and Vitamin A, evidence that fortification cansimilarly address iron deficiency at the population level ismore limited (Uauy, Hertrampf, & Reddy 2002). Further,many households in rural Northwest China grow andconsume their own food (especially wheat), so fortificationis likely to be ineffective.4Iron repletion can improve—and possibly reverse—the detrimentaleffects of anemia. Improvements in language and motor developmenthave been observed among pre-school age children in East Africafollowing increased levels of iron (Stoltzfus et al., 2001). In a metaanalysis of randomized controlled trials that provided iron supplements,Sachdev, Gera, and Nestel (2005) find that iron supplements significantlyimproved the performance of children on tests of cognitive development,especially among children who were initially anemic.3A third approach to overcoming anemia is the provisionof micronutrient supplements (multivitamins) containingiron. To be effective, however, daily consumption over timeis necessary. Consequently, compliance may be inadequatedue to the need for sustained effort. In addition, multivitamins are not widely available in many rural areas ofChina.One method of delivering these interventions tochildren is to work with parents and caregivers. In lowincome settings, however, multiple barriers ranging fromlack of information to market imperfections limit theability of individuals to invest in health (for a review,