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Motivation and competition in health care
1Melbourne Institute: Applied Economic and Social Research, The University of Melbourne, Melbourne, Victoria, Australia.
Insights
Physicians with a higher marginal utility of income (MUY) are more likely to charge higher prices when facing less competition. This highlights how income motivation influences physician pricing strategies in healthcare markets.
Area of Science:
- Health Economics
- Behavioral Economics
- Physician Behavior
Background:
- Non-pecuniary motivations are significant in healthcare.
- The effect of competitive incentives may be reduced when financial motivation is low.
Purpose of the Study:
- Measure the marginal utility of income (MUY) for physicians.
- Examine if MUY affects the relationship between physician competition and prices charged.
Main Methods:
- Utilized a stated-choice experiment to measure physicians' MUY.
- Analyzed the association between market competition and physician-set prices.
Main Results:
- Physicians with a high MUY are more prone to exploit reduced competition by increasing prices.
- MUY is a significant factor in understanding physician pricing behavior under varying competitive conditions.
Conclusions:
- Physician income motivation, specifically MUY, plays a crucial role in how they respond to market competition.
- Understanding MUY is essential for designing effective healthcare policies and interventions related to pricing and competition.
Abstract:
Non-pecuniary sources of motivation are a strong feature of the health care sector and the impact of competitive incentives on behavior may be lower where pecuniary motivation is low. This paper measures the marginal utility of income (MUY) of physicians from a stated-choice experiment, and examines whether this measure influences the association between competition faced by physicians and the prices they charge. We find that physicians are more likely to exploit a lack of competition with higher prices if they have a high MUY.
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