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Estimating Heterogeneity in the Benefits of Medical Treatment Intensity


  • William N. Evans

    (Department of Economics, University of Notre Dame)

  • Craig Garthwaite

    (Department of Management and Strategy, Kellogg School of Management, Northwestern University)


We exploit increases in postpartum length of stay generated by legislative changes in the late 1990s to identify the impact of greater hospital care on the health of newborns. Using all births in California over the 1995–2000 period, two-stage least-square estimates show that increased treatment intensity had a modest impact on readmission probabilities for the average newborn. Allowing the treatment effect to vary by two objective measures of medical need demonstrates that the law had large impacts for those with the greatest likelihood of a readmission. The results suggest that the returns to average and marginal patients vary considerably in this context. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • William N. Evans & Craig Garthwaite, 2012. "Estimating Heterogeneity in the Benefits of Medical Treatment Intensity," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 635-649, August.
  • Handle: RePEc:tpr:restat:v:94:y:2012:i:3:p:635-649

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    References listed on IDEAS

    1. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115, pages 103-140.
    2. Alberto Abadie & Joshua Angrist & Guido Imbens, 2002. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Econometrica, Econometric Society, vol. 70(1), pages 91-117, January.
    3. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects, and Econometric Policy Evaluation," Econometrica, Econometric Society, vol. 73(3), pages 669-738, May.
    4. Douglas Almond & Joseph J. Doyle & Amanda E. Kowalski & Heidi Williams, 2010. "Estimating Marginal Returns to Medical Care: Evidence from At-risk Newborns," The Quarterly Journal of Economics, Oxford University Press, vol. 125(2), pages 591-634.
    5. Evans, William N. & Garthwaite, Craig & Wei, Heng, 2008. "The impact of early discharge laws on the health of newborns," Journal of Health Economics, Elsevier, vol. 27(4), pages 843-870, July.
    6. James J. Heckman & Jeffrey Smith & Nancy Clements, 1997. "Making The Most Out Of Programme Evaluations and Social Experiments: Accounting For Heterogeneity in Programme Impacts," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 487-535.
    7. Duggan Mark G & Evans William N, 2008. "Estimating the Impact of Medical Innovation: A Case Study of HIV Antiretroviral Treatments," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-39, January.
    8. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence from Heart Attack Treatments," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 991-1024.
    9. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
    10. James Heckman & Justin L. Tobias & Edward Vytlacil, 2003. "Simple Estimators for Treatment Parameters in a Latent-Variable Framework," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 748-755, August.
    11. Amy Finkelstein & Robin McKnight, 2005. "What Did Medicare Do (And Was It Worth It)?," NBER Working Papers 11609, National Bureau of Economic Research, Inc.
    12. Anirban Basu & James J. Heckman & Salvador Navarro-Lozano & Sergio Urzua, 2007. "Use of instrumental variables in the presence of heterogeneity and self-selection: an application to treatments of breast cancer patients," Health Economics, John Wiley & Sons, Ltd., vol. 16(11), pages 1133-1157.
    13. Anirban Basu & James J. Heckman & Salvador Navarro-Lozano & Sergio Urzua, 2007. "Use of instrumental variables in the presence of heterogeneity and self-selection: An application in breast cancer patients," Health, Econometrics and Data Group (HEDG) Working Papers 07/07, HEDG, c/o Department of Economics, University of York.
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    Cited by:

    1. Seojeong Lee, 2015. "A Consistent Variance Estimator for 2SLS When Instruments Identify Different LATEs," Discussion Papers 2015-01, School of Economics, The University of New South Wales.
    2. N. Meltem Daysal, 2015. "Early-life medical care and human capital accumulation," IZA World of Labor, Institute for the Study of Labor (IZA), pages 218-218, December.
    3. repec:eee:jhecon:v:55:y:2017:i:c:p:121-138 is not listed on IDEAS
    4. Mindy Marks & Kate Choi, 2011. "Baby Boomlets and Baby Health: Hospital Crowdedness, Treatment Intensity, and Infant Health," Working Papers 201440, University of California at Riverside, Department of Economics.
    5. David B. Audretsch, 2015. "Knowledge spillovers and future jobs," IZA World of Labor, Institute for the Study of Labor (IZA), pages 218-218, December.

    More about this item


    hospital stay; hospital care; birth; newborns;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


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