IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/26460.html
   My bibliography  Save this paper

Does The Market Reward Quality?: Evidence from India

Author

Listed:
  • Zachary Wagner
  • Somalee Banerjee
  • Manoj Mohanan
  • Neeraj Sood

Abstract

There are two salient facts about health care in low and middle-income countries; 1) the private sector plays an important role and 2) the care provided is often of poor quality. Despite these facts we know little about what drives quality of care in the private sector and why patients continue to seek care from poor quality providers. We use two field studies in India that provide unique insight into this issue. First, we use a discrete choice experiment to show that patients are willing to pay higher prices for better technical quality (defined by correct treatment and correct diagnosis). Second, we use standardized patients to show that private providers who provide better technical quality are not able to charge higher prices. Instead providers are able to charge higher prices for elements of quality that the patient can observe (good patient interactions and more effort), which are less important for health outcomes. Taken together, this research highlights a market inefficiency and suggests that engaging patients with accessible information on technical quality of the providers in their community could shift demand to providers that provide better care and thus improve health outcomes.

Suggested Citation

  • Zachary Wagner & Somalee Banerjee & Manoj Mohanan & Neeraj Sood, 2019. "Does The Market Reward Quality?: Evidence from India," NBER Working Papers 26460, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26460
    Note: CH DEV EH
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w26460.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sima Berendes & Peter Heywood & Sandy Oliver & Paul Garner, 2011. "Quality of Private and Public Ambulatory Health Care in Low and Middle Income Countries: Systematic Review of Comparative Studies," PLOS Medicine, Public Library of Science, vol. 8(4), pages 1-10, April.
    2. Kremer, Michael & Glennerster, Rachel, 2011. "Improving Health in Developing Countries," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 201-315, Elsevier.
    3. Jin, Ginger Zhe & Leslie, Phillip, 2005. "The Case in Support of Restaurant Hygiene Grade Cards," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 20(2), pages 1-6.
    4. Sanjay Basu & Jason Andrews & Sandeep Kishore & Rajesh Panjabi & David Stuckler, 2012. "Comparative Performance of Private and Public Healthcare Systems in Low- and Middle-Income Countries: A Systematic Review," PLOS Medicine, Public Library of Science, vol. 9(6), pages 1-14, June.
    5. Jishnu Das & Jeffrey Hammer & Kenneth Leonard, 2008. "The Quality of Medical Advice in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 93-114, Spring.
    6. 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.
    7. Jishnu Das & Alaka Holla & Aakash Mohpal & Karthik Muralidharan, 2016. "Quality and Accountability in Health Care Delivery: Audit-Study Evidence from Primary Care in India," American Economic Review, American Economic Association, vol. 106(12), pages 3765-3799, December.
    8. Zachary Wagner & John Bosco Asiimwe & William H Dow & David I Levine, 2019. "The role of price and convenience in use of oral rehydration salts to treat child diarrhea: A cluster randomized trial in Uganda," PLOS Medicine, Public Library of Science, vol. 16(1), pages 1-18, January.
    9. Kara Hanson & Barbara McPake & Pamela Nakamba & Luke Archard, 2005. "Preferences for hospital quality in Zambia: results from a discrete choice experiment," Health Economics, John Wiley & Sons, Ltd., vol. 14(7), pages 687-701, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kai Shen Lim & Wei Aun Yap & Winnie Yip, 2022. "Consumer choice and public‐private providers: The role of perceived prices," Health Economics, John Wiley & Sons, Ltd., vol. 31(9), pages 1898-1925, September.
    2. He, Daixin & Lu, Fangwen & Yang, Jianan, 2023. "Impact of self- or social-regarding health messages: Experimental evidence based on antibiotics purchases," Journal of Development Economics, Elsevier, vol. 163(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leonard, David K. & Bloom, Gerald & Hanson, Kara & O’Farrell, Juan & Spicer, Neil, 2013. "Institutional Solutions to the Asymmetric Information Problem in Health and Development Services for the Poor," World Development, Elsevier, vol. 48(C), pages 71-87.
    2. Grant Miller & Kimberly Singer Babiarz, 2013. "Pay-for-Performance Incentives in Low- and Middle-Income Country Health Programs," NBER Working Papers 18932, National Bureau of Economic Research, Inc.
    3. Cammett, Melani & Şaşmaz, Aytuğ, 2017. "Political Context, Organizational Mission, and the Quality of Social Services: Insights from the Health Sector in Lebanon," World Development, Elsevier, vol. 98(C), pages 120-132.
    4. Bernal, Pedro & Martinez, Sebastian, 2020. "In-kind incentives and health worker performance: Experimental evidence from El Salvador," Journal of Health Economics, Elsevier, vol. 70(C).
    5. ILes, Richard, 2017. "Government Doctor Absenteeism And Its Effects On Consumer Demand In Rural North India," Working Papers 2018-9, School of Economic Sciences, Washington State University, revised 12 2018.
    6. Jacob Assa & Cecilia Calderon, 2020. "Privatization and Pandemic: A Cross-Country Analysis of COVID-19 Rates and Health-Care Financing Structures," Working Papers 2008, New School for Social Research, Department of Economics.
    7. Liang Bai & Benjamin Handel & Edward Miguel & Gautam Rao, 2021. "Self-Control and Demand for Preventive Health: Evidence from Hypertension in India," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 835-856, December.
    8. Bernal, Noelia & Carpio, Miguel A. & Klein, Tobias J., 2017. "The effects of access to health insurance: Evidence from a regression discontinuity design in Peru," Journal of Public Economics, Elsevier, vol. 154(C), pages 122-136.
    9. Callejas, Jerónimo & Mohapatra, Debi Prasad, 2021. "Welfare effects of public procurement of medicines: Evidence from Ecuador," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    10. Dhaliwal, Iqbal & Hanna, Rema, 2017. "The devil is in the details: The successes and limitations of bureaucratic reform in India," Journal of Development Economics, Elsevier, vol. 124(C), pages 1-21.
    11. Eduard Marinov, 2019. "The 2019 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 78-116.
    12. Cristian A Herrera & Gabriel Rada & Lucy Kuhn-Barrientos & Ximena Barrios, 2014. "Does Ownership Matter? An Overview of Systematic Reviews of the Performance of Private For-Profit, Private Not-For-Profit and Public Healthcare Providers," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-18, December.
    13. Haenssgen, Marco J. & Ariana, Proochista, 2017. "The Social Implications of Technology Diffusion: Uncovering the Unintended Consequences of People’s Health-Related Mobile Phone Use in Rural India and China," World Development, Elsevier, vol. 94(C), pages 286-304.
    14. Callen, Michael & Gulzar, Saad & Hasanain, Ali & Khan, Muhammad Yasir & Rezaee, Arman, 2023. "The political economy of public sector absence," Journal of Public Economics, Elsevier, vol. 218(C).
    15. Bauhoff,Sebastian Peter Alexander & Kandpal,Eeshani, 2021. "Information, Loss Framing, and Spillovers in Pay-for-Performance Contracts," Policy Research Working Paper Series 9687, The World Bank.
    16. Leonard, Kenneth L. & Masatu, Melkiory C., 2010. "Using the Hawthorne effect to examine the gap between a doctor's best possible practice and actual performance," Journal of Development Economics, Elsevier, vol. 93(2), pages 226-234, November.
    17. Juliet Mwanga-Amumpaire & Tobias Alfvén & Celestino Obua & Karin Källander & Richard Migisha & Cecilia Stålsby Lundborg & Grace Ndeezi & Joan Nakayaga Kalyango, 2021. "Appropriateness of Care for Common Childhood Infections at Low-Level Private Health Facilities in a Rural District in Western Uganda," IJERPH, MDPI, vol. 18(15), pages 1-16, July.
    18. Sujha Subramanian & Robai Gakunga & Joseph Kibachio & Gladwell Gathecha & Patrick Edwards & Elijah Ogola & Gerald Yonga & Naftali Busakhala & Esther Munyoro & Jeremiah Chakaya & Nancy Ngugi & Nyawira , 2018. "Cost and affordability of non-communicable disease screening, diagnosis and treatment in Kenya: Patient payments in the private and public sectors," PLOS ONE, Public Library of Science, vol. 13(1), pages 1-16, January.
    19. Das, Jishnu & Daniels, Benjamin & Ashok, Monisha & Shim, Eun-Young & Muralidharan, Karthik, 2022. "Two Indias: The structure of primary health care markets in rural Indian villages with implications for policy," Social Science & Medicine, Elsevier, vol. 301(C).
    20. Jishnu Das, 2011. "The Quality of Medical Care in Low-Income Countries: From Providers to Markets," PLOS Medicine, Public Library of Science, vol. 8(4), pages 1-2, April.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • I1 - Health, Education, and Welfare - - Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:26460. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.