Taps, toilets and nets: Impact of micro-finance and social interactions on prevention behaviors in rural India

Millions die from malaria and diarrhea in developing countries every year. Public health interventions to reduce such mortality rates are often unsuccessful because of two reasons – (1) poor families are unable to afford the preventive measures and (2) lack of information regarding the benefits from adoption. Micro-finance initiatives to promote economic development alternatives have been widely successful in helping individual families overcome financial bottlenecks. An indirect consequence of participating in micro-finance groups is the collective learning through sharing of experiences among members. We use survey data from 600 households in a poor region of rural India to assess the impact of participation in local micro-finance organizations in adoption of mosquito nets, toilets and piped water – three common interventions to reduce incidence of malaria and diarrhea. We also investigate how social interactions and peer-effects can amplify (through information spillovers) the potential of public health interventions. Our regression models concur with the common belief that richer families are more likely to adopt preventive measures like using mosquito nets, private toilets and piped water. They also show that microfinance participants are more likely to invest in mosquito nets (by 9%), piped water (by 6%) and pit latrines (by 1%), even though microfinance is in its early stage in this region. We find evidence of demonstration effects - adoption increase as others in the village do the same.