The cost of imperfect agency in health care: Evidence from rural Cameroun
Health is a pressing problem facing Africans today, yet health care systems in Africa are inadequate and under-funded. We show that pervasive imperfect agency means that they are also inefficient. Imperfect agency (due to unobservable medical effort) is a recognized market failure in health care, but its impact is difficult to measure. We take an indirect approach to estimation and infer the cost of unobservable effort from the behavior of utility-maximizing patients, specifically their willingness to incur measurable costs to avoid practitioners who shirk. We use a unique data set from rural Cameroun where patients choose between the government health system, church-operated (mission) health facilities and, importantly, traditional healers. Traditional healers provide health services on an outcome-contingent basis where patients pay only if they are cured. Both government and mission facilities, in contrast, are paid on a fee-for-service basis. Patients' choices of practitioners, combined with quantitative information about patients' illnesses, permit a structural estimation of the value of unobservable medical effort. The results allow investigation into the nature of agency, its costs, and the manner in which contracts reduce and patient behavior mitigates those costs. We estimate that in the absence of imperfect agency, utility from health care would increase by at least 160%. Even in the face of imperfect agency, the sophistication of patients in choosing between existing contracts for different illnesses increases utility by up to 20%.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bengt Holmstrom, 1982.
"Moral Hazard in Teams,"
Bell Journal of Economics,
The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
- Paul Collier & Stefan Dercon & John Mackinnon, 2004.
"Density versus Quality in Health Care Provision: Using Household Data to Make Budgetary Choices in Ethiopia,"
Development and Comp Systems
- 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.
- Paul Collier & Stefan Dercon & John Mackinnon, 2002. "Density versus quality in health care provision: Using household data to make budgetary choices in Ethiopia," CSAE Working Paper Series 2002-17, Centre for the Study of African Economies, University of Oxford.
- Leonard, Kenneth & Masatu, Melkiory C., 2006. "Outpatient process quality evaluation and the Hawthorne Effect," Social Science & Medicine, Elsevier, vol. 63(9), pages 2330-2340, November.
- Leonard, Kenneth L., 2003. "African traditional healers and outcome-contingent contracts in health care," Journal of Development Economics, Elsevier, vol. 71(1), pages 1-22, June.
- Mwabu, Germano M., 1986. "Health care decisions at the household level: Results of a rural health survey in Kenya," Social Science & Medicine, Elsevier, vol. 22(3), pages 315-319, January.
- Lindelow, Magnus & Serneels, Pieter & Lemma, Teigist, 2005.
"The performance of health workers in Ethiopia - results from qualitative research,"
Policy Research Working Paper Series
3558, The World Bank.
- Lindelow, Magnus & Serneels, Pieter, 2006. "The performance of health workers in Ethiopia: Results from qualitative research," Social Science & Medicine, Elsevier, vol. 62(9), pages 2225-2235, May.
- Magnus Lindelow & Pieter Serneels & Teigist Lemma, 2005. "The Performance of Health Workers in Ethiopia Results from Qualitative Research," CSAE Working Paper Series 2005-06, Centre for the Study of African Economies, University of Oxford.
- Leonard, Kenneth L. & Masatu, Melkiory C., 2005. "The use of direct clinician observation and vignettes for health services quality evaluation in developing countries," Social Science & Medicine, Elsevier, vol. 61(9), pages 1944-1951, November.
- Kenneth L. Leonard & Melkiory C. Masatu & Alexandre Vialou, 2007. "Getting Doctors to Do Their Best: The Roles of Ability and Motivation in Health Care Quality," Journal of Human Resources, University of Wisconsin Press, vol. 42(3).
- Kenneth L. Leonard, 2007.
"Learning in Health Care: Evidence of Learning about Clinician Quality in Tanzania,"
Economic Development and Cultural Change,
University of Chicago Press, vol. 55, pages 531-555.
- Leonard, Kenneth L, 2007. "Learning in Health Care: Evidence of Learning about Clinician Quality in Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 55(3), pages 531-55, April.
- Kenneth L. Leonard & Joshua Graff Zivin, 2005.
"Outcome versus service based payments in health care: lessons from African traditional healers,"
John Wiley & Sons, Ltd., vol. 14(6), pages 575-593.
- Kenneth Leonard & Joshua Graff Zivin, 2003. "Outcome Versus Service Based Payment in Health Care: Lessons from African Traditional Healers," NBER Working Papers 9797, National Bureau of Economic Research, Inc.
- Filmer, Deon & Hammer, Jeffrey S & Pritchett, Lant H, 2000. "Weak Links in the Chain: A Diagnosis of Health Policy in Poor Countries," World Bank Research Observer, World Bank Group, vol. 15(2), pages 199-224, August.
- Mooney, Gavin & Ryan, Mandy, 1993. "Agency in health care: Getting beyond first principles," Journal of Health Economics, Elsevier, vol. 12(2), pages 125-135, July.
- Leonard, Kenneth L., 2002. "When both states and markets fail: asymmetric information and the role of NGOs in African health care," International Review of Law and Economics, Elsevier, vol. 22(1), pages 61-80, July.
- Das, Jishnu & Hammer, Jeffrey, 2005.
"Money for nothing : the dire straits of medical practice in Delhi, India,"
Policy Research Working Paper Series
3669, The World Bank.
- 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.
- Das, Jishnu & Hammer, Jeffrey, 2004. "Which doctor? Combining vignettes and item response to measure doctor quality," Policy Research Working Paper Series 3301, The World Bank.
- Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-67, June.
When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:88:y:2009:i:2:p:282-291. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.