Identification of Physician-Induced Demand

Louis F. Rossiter and Gail R. Wilensky

Journal of Human Resources, 1984, vol. 19, issue 2, 231-244

Abstract: Whether market failure exists in the health care sector, because physicians induce demand in their own self-interest, has not been clearly addressed because of identification problems. A model is developed which includes the patient's financial burden as a limiting factor on demand inducement. New data from a national survey are used to test the demand inducement hypothesis and identify physician-initiated expenditures. When individual health insurance and other factors are held constant, additional corroboration of the physician-induced demand hypothesis is found, but the magnitude of the effect is very small and is statistically significant only for more discretionary expenditures.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:19:y:1984:i:2:p:231-244

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