Should Clean Water Have a Price?

From Jesse Shapiro, Becker Center on Chicago Price Theory, University of Chicago, writing in this week's Forbes:

"Each year some 1.6 million people, most of them small children, die form diarrhea caused by poor water quality. Many of these deaths are avoidable. Anyone with a back-yard pool knows dirty water is easily made safe by using good old-fashioned chloring...so why could charging more (for Clorin, a water sanitizer) help solve this problem?...First, it might be that charging a price means only people who intend t use it will show up to buy. with free products there's a risk that people will take a sample with no intention of using it. I'll gladly accept a free subscription to a boring magazine; whether I'll read it is another question. Second, it could be that paying, or paying more, makes the buyer feel that he should use the product. This is why I'd finish an expensive bottle of wine even if it tasted like perfectly aged mouthwash, but I'd toss a cheap bottle with the same iffy flavor down the drain."

Fortunately, Dr. Shapiro tested the theory:

"In the spring of 2006, in collaboration with PSI, we sent marketers to visit 1,000 households in Lusaka, Zambia. At each house a marketer offered to sell a single bottle of Clorin at a randomly chosen discounted price. If the household agreed to buy Clorin at that price, we then surprised them with a second discount, again chosen randomly. here's what we found: Households that agreed to pay more for Clorin did use it more; their water was more likely to be chlorinated when we showed up to test it two weeks later. As for the surprise discount, we found that when we gave people a deal, it didn't affect how much Clorin they used. But there is some evidence that those who paid something were more likely to use their Clorin than those who got it for free. That is, the data hint that the act of paying in itself may make people more likely to put Clorin in their water...the results do show that pricing can help to get lifesaving products into the hands of those who will use them most. What's more, charging a price may cause people to use more than they otherwise would."