Selection into Medicine

This paper examines how selection into medicine in the United States influences physician practice styles. We exploit macroeconomic conditions at the time of medical school application as an exogenous shock to the applicant pool and find that labor market downturns in other prestigious fields increase applications to medical school and shift the composition of matriculating cohorts toward students from non–pre-medical backgrounds. Strikingly, these low–outside-option cohorts practice medicine differently decades later. Conditional on experience, specialty, and outcome year, recession-cohort physicians bill Medicare more per beneficiary despite seeing healthier patients—particularly on discretionary, revenue-generating services—and sort into practice settings with higher-powered financial incentives. The additional spending does not produce detectable improvements in patient health. Taken together, our findings point to stronger financial motivation among those drawn into medicine when outside options are weak and suggest that medical school admissions screen imperfectly on the attributes that ultimately shape how physicians practice.