Social interactions in inappropriate behavior for childbirth services: theory and evidence from the Italian hospital sector

Empirical evidence supports the conjecture that social interactions among agents can produce both positive and negative effects. We build on this literature by exploring the role of social interactions in the hospital sector using the large incidence of cesarean sections, usually considered an inappropriate outcome in the childbirth service. In doing so, we lay out a simple model of hospitals’ behavior where the effect of peers’ behavior emerges simply by sharing the same institutional authority responsible for auditing inappropriate behavior. In this setting, enforcement congestion induces a peer effect among hospitals that could make inappropriate behaviors more likely. Then, using the risk-adjusted cesarean section rate of a large panel of Italian hospitals, we empirically investigate whether the behavior of each hospital is affected by the behavior of hospitals withinthe same region, after controlling for demand, supply, and financial factors. In particular, our empirical test employs both peer effects estimate and the spatial econometric approach, exploiting the panel dimension of our data. Both estimates show a significant and strong presence of peer effects among hospitals. We interpret this evidence as a presence of constraint interactions within the hospital sector, which has important implications for healthcare policies against inappropriateness.