Pro-social preferences and self-selection into the public health sector: evidence from economic experiments

There is growing interest in the role of pro-social motivation in public service delivery. In general, economists no longer question whether people have social preferences, but ask how and when such preferences will influence their economic and social decisions. Apart from revealing that individuals on average share and cooperate even when such actions lower their own material pay-off, economic experiments have documented substantial individual heterogeneity in the strength and structure of social preferences. In this paper we study the extent to which these differences are related to career choices, by testing whether preferences vary systematically between Tanzanian health worker students who prefer to work in the private health sector and those who prefer to work in the public health sector. Despite its important policy implications, this issue has received hardly any attention to date. By combining data from a questionnaire and two economic experiments, we find that students who prefer to work in the public health sector have stronger pro-social preferences than those who prefer to work in the private sector. We also show that the extent to which these students care about others can be conditional and linked to inequality aversion. A systematic selfselection of pro-socially motivated health workers into the public sector suggests that it is a good idea to have two sectors providing health services: this can ensure efficient matching of individuals and sectors by allowing employers in the two sectors to use different payment mechanisms tailored to attract and promote good performance from different types of health workers.