were not actually around—but this was officially sanctioned
by the local health administration. There was also a sharp
increase in “machine problems,” as the time clocks were
broken. But Seva Mandir was unable to replace them
because local health ministers would not cooperate.
Forcing nurses to stamp a time clock three times a day
doesn’t seem like such an innovative idea. Indeed, it is a
practice used throughout the industry, even Indian industry,
and it must have occurred to health administrators as a
potential solution to their problems. It seems unlikely, then,
that ignorance of such a simple incentive scheme was what
stopped its being used in the first place. What occurred
during the program simply confirmed this. Health
administrators sabotaged the program because they were
in cahoots with the nurses and complicit in the endemic
absenteeism problems. They did not want an incentive
scheme forcing nurses to turn up or reducing their pay if
they did not.
What this episode illustrates is a micro version of the
difficulty of implementing meaningful changes when
institutions are the cause of the problems in the first place.
In this case, it was not corrupt politicians or powerful
businesses undermining institutional reform, but rather, the
local health administration and nurses who were able to
sabotage Seva Mandir’s and the development economists’
incentive scheme. This suggests that many of the micro-
market failures that are apparently easy to fix may be
illusory: the institutional structure that creates market
failures will also prevent implementation of interventions to
improve incentives at the micro level. Attempting to
engineer prosperity without confronting the root cause of
the problems—extractive institutions and the politics that
keeps them in place—is unlikely to bear fruit.
T