Outcome- and Input-Based Incentives: Experimental Evidence from a Municipal Incentive Program in Peru

This project evaluates how institutional incentives and managerial capacity jointly influence public service delivery and health outcomes in rural Peru. In partnership with the Ministry of Economy and Ministry of Health, I conducted a large-scale cluster-randomized trial involving the universe of municipalities implementing a national Home Visit Program to reduce children’s anemia. Municipalities were randomly assigned to either input-based incentives (IBI contract), which reward the frequency of home visits, or combined input- and outcome- based incentives (IOBI contract), which additionally reward reductions in anemia. In this context, municipal managers are pivotal to improving service delivery, as they have the authority and operational scope to drive change. To test whether managers’ skills mediate the effectiveness of these contracts, I cross-randomized a managerial training intervention (Workshop intervention). The Workshop intervention had an attendance of 90%. It provided managers with custom technology to track program outcomes and frontline worker effort using existing administrative data, giving them better real-time insight into performance. It also built their skills to interpret and act on this information to strengthen service delivery. The design allows me to examine whether outcome-based incentives improve service quality and whether having a monitoring technology and the skills to act on it amplify those effects. Preliminary results (3 and 6 months since the start of the Incentive intervention) show that while anemia outcomes remained unchanged in the short term, adding outcome-based indicators in contracts improved managerial oversight and boosted non-incentivized outcomes like vaccination.