Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: Mobile Phones, Rent-to-Own Payments & Water Filters:

Friday, November 13, 2015 : 2:10 PM
President's Room (Hyatt Regency Miami)

*Names in bold indicate Presenter

Jill E Luoto, RAND Corporation
Consistent and widespread uptake of safe water products such as chlorine and filters to reduce diarrhea remains stubbornly low throughout the developing world, in spite of modest costs and potentially large benefits. Similar problems exist for many other important health products characterized by upfront fixed costs and uncertain (delayed) benefits. We experimented with a sales offer for durable filters that combined a free trial to overcome product uncertainty, and rent-to-own payments to overcome liquidity constraints. Purchase rates doubled under this sales offer, to 31%, compared to a traditional lump-sum sales contract, and were zero at baseline. To lower transaction costs, we collected payments using Kenya’s vast mobile banking network, MPESA. Mobile repayment rates were low; many filters were paid only when a vendor came in-person to request payment, which adds social pressure and potentially forces an end to procrastination. While the rent-to-own offer is attractive, more work is needed to reduce transaction costs in rural and peri-urban Kenya.

Full Paper: