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Geographic variations in a model of physician treatment choice with social interactions

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  • Mary A. Burke
  • Gary M. Fournier
  • Kislaya Prasad

Abstract

Location-specific norms of behavior are a widespread phenomenon. In the case of medical practice, numerous studies have found that geographic location exerts a strong influence on the choice of treatments and procedures. This paper shows how the presence of social influence on treatment decisions can help to explain this phenomenon. We construct a theoretical model in which physicians' treatment choices depend on patients' characteristics and on the recent choices of nearby peers - either because there are local knowledge spillovers or because physicians want to conform to local practice patterns. In our model, regional differences in the patient mix give rise to geographically divergent treatment patterns - the treatment a patient receives depends on where she lives. Investigation of Florida data reveals significant geographic variation in treatment rates consistent with the predictions of our model. Implications for patient welfare are explored.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 09-5.

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Date of creation: 2009
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Handle: RePEc:fip:fedbwp:09-5

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Keywords: Medical care;

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  1. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  2. Folland, Sherman & Stano, Miron, 1989. "Sources of small area variations in the use of medical care," Journal of Health Economics, Elsevier, vol. 8(1), pages 85-107, March.
  3. Grytten, Jostein & Sorensen, Rune, 2003. "Practice variation and physician-specific effects," Journal of Health Economics, Elsevier, vol. 22(3), pages 403-418, May.
  4. Amitabh Chandra & Douglas Staiger, 2004. "Testing a Roy Model with Productivity Spillovers: Evidence from the Treatment of Heart Attacks," NBER Working Papers 10811, National Bureau of Economic Research, Inc.
  5. Mary A. Burke & Gary M. Fournier & Kislaya Prasad, 2006. "The Emergence of Local Norms in Networks," Working Papers wp2006_02_01, Department of Economics, Florida State University.
  6. Brock, William A & Durlauf, Steven N, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 235-60, April.
  7. Shinichi Nakagawa, 2004. "A farewell to Bonferroni: the problems of low statistical power and publication bias," Behavioral Ecology, International Society for Behavioral Ecology, vol. 15(6), pages 1044-1045, November.
  8. Mary A. Burke & Gary M. Fournier & Kislaya Prasad, 2007. "The Diffusion of a Medical Innovation: Is Success in the Stars?," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 588–603, January.
  9. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  10. H. Peyton Young & Mary A. Burke, 2001. "Competition and Custom in Economic Contracts: A Case Study of Illinois Agriculture," American Economic Review, American Economic Association, vol. 91(3), pages 559-573, June.
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Cited by:
  1. Mangham-Jefferies, Lindsay & Hanson, Kara & Mbacham, Wilfred & Onwujekwe, Obinna & Wiseman, Virginia, 2014. "What determines providers' stated preference for the treatment of uncomplicated malaria?," Social Science & Medicine, Elsevier, vol. 104(C), pages 98-106.

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