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Money for nothing: The dire straits of medical practice in Delhi, India

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  • Das, Jishnu
  • Hammer, Jeffrey

Abstract

The quality of medical care received by patients varies for two reasons: differences in doctors'competence or differences in doctors'incentives. Using medical vignettes, the authors evaluated competence for a sample of doctors in Delhi. One month later, they observed the same doctors in their practice. The authors find three patterns in the data. First, what doctors do is less than what they know they should do-doctors operate well inside their knowledge frontier. Second, competence and effort are complementary so that doctors who know more also do more. Third, the gap between what doctors do and what they know responds to incentives: doctors in the fee-for-service private sector are closer in practice to their knowledge frontier than those in the fixed-salary public sector. Under-qualified private sector doctors, even though they know less, provide better care on average than their better-qualified counterparts in the public sector. These results indicate that to improve medical services, at least for poor people, there should be greater emphasis on changing the incentives of public providers rather than increasing provider competence through training.
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Suggested Citation

  • Das, Jishnu & Hammer, Jeffrey, 2007. "Money for nothing: The dire straits of medical practice in Delhi, India," Journal of Development Economics, Elsevier, vol. 83(1), pages 1-36, May.
    • Handle: RePEc:eee:deveco:v:83:y:2007:i:1:p:1-36
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    References listed on IDEAS

    as
    1. Daniel A. Ackerberg & Maristella Botticini, 2002. "Endogenous Matching and the Empirical Determinants of Contract Form," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 564-591, June.
    2. Abhijit Banerjee & Angus Deaton & Esther Duflo, 2004. "Wealth, Health, and Health Services in Rural Rajasthan," American Economic Review, American Economic Association, vol. 94(2), pages 326-330, May.
    3. Mattoo, Aaditya & Rathindran, Randeep, 2005. "Does health insurance impede trade inhealth care services?," Policy Research Working Paper Series 3667, The World Bank.
    4. Martin Gaynor & James B. Rebitzer & Lowell J. Taylor, 2004. "Physician Incentives in Health Maintenance Organizations," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 915-931, August.
    5. Paul Collier & Stefan Dercon & John Mackinnon, 2002. "Density versus Quality in Health Care Provision: Using Household Data to Make Budgetary Choices in Ethiopia," World Bank Economic Review, World Bank Group, vol. 16(3), pages 425-448, December.
    6. Chaudhury, Nazmul & Hammer, Jeffrey S., 2003. "Ghost doctors - absenteeism in Bangladeshi health facilities," Policy Research Working Paper Series 3065, The World Bank.
    7. Das, Jishnu & Sanchez-Paramo, Carolina, 2003. "Short but not sweet - new evidence on short duration morbidities from India," Policy Research Working Paper Series 2971, The World Bank.
    8. Das, Jishnu & Hammer, Jeffrey, 2005. "Which doctor? Combining vignettes and item response to measure clinical competence," Journal of Development Economics, Elsevier, vol. 78(2), pages 348-383, December.
    9. Das, Jishnu & Hammer, Jeffrey, 2004. "Strained mercy : The quality of medical care in Delhi," Policy Research Working Paper Series 3228, The World Bank.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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