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

Motivational crowding-out theory establishes that the effectiveness of financial incentive schemes, like pay-for-performance, crucially depends on the underlying social preferences of health workers. In this paper we study the extent to which heterogeneity in the strength and structure of social preferences is related to career choices by testing whether preferences vary systematically between Tanzanian health worker students who prefer to work in the private for-profit health sector and those who prefer to work in the public health sector. Despite its important policy implications, this issue has received little attention to date. By combining data from a questionnaire and an economic experiment, 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 for-profit sector.