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Moral hazard and the demand for physician services: First lessons from a French natural experiment

  • Chiappori, Pierre-Andre
  • Durand, Franck
  • Geoffard, Pierre-Yves

This paper presents first empirical results on moral hazard in demand for physician services, using a longitudinal dataset on 4578 individuals followed during two years. The data set contains two subgroups, one for which a copayment rate of 10% for physician visits was introduced in 1994, and an other for which no change occured during the period of the study. This enables us to use these data as coming from a controlled natural experiment. We test if the number of visits per agent was modified by this copayment rate. The data reject the hypothesis for office visits, but do not for home visits. This suggests that there is moral hazard in demand for some physician services, but also that when non-monetary costs are important, small changes in monetary price may not induce any major change in behaviour.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 42 (1998)
Issue (Month): 3-5 (May)
Pages: 499-511

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Handle: RePEc:eee:eecrev:v:42:y:1998:i:3-5:p:499-511
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  1. Phelps, Charles E & Newhouse, Joseph P, 1974. "Coinsurance, the Price of Time, and the Demand for Medical Services," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 334-42, August.
  2. Georges Dionne & Christian Gourieroux & Charles Vanasse, 1998. "Evidence of Adverse Selection in Automobile Insurance Markets," Working Papers 98-24, Centre de Recherche en Economie et Statistique.
  3. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
  4. Pierre-André Chiappori & Bernard Salanié, 1997. "Testing for Asymmetric Information in Insurance Markets," Working Papers 97-11, Centre de Recherche en Economie et Statistique.
  5. Chiappori, Pierre-Andre & Salanie, Bernard, 1997. "Empirical contract theory: The case of insurance data," European Economic Review, Elsevier, vol. 41(3-5), pages 943-950, April.
  6. Laurent Caussat & Michel Glaude, 1993. "Dépenses médicales et couverture sociale," Économie et Statistique, Programme National Persée, vol. 265(1), pages 31-43.
  7. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
  8. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  9. repec:crs:wpaper:9701 is not listed on IDEAS
  10. Georges Dionne & Christian Gourieroux & Charles Vanasse, 1997. "The Informational Content of Household Decisions," Working Papers 97-01, Centre de Recherche en Economie et Statistique.
  11. Puelz, Robert & Snow, Arthur, 1994. "Evidence on Adverse Selection: Equilibrium Signaling and Cross-Subsidization in the Insurance Market," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 236-57, April.
  12. repec:crs:wpaper:9711 is not listed on IDEAS
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