Geographic Variations in a Model of Physician Treatment Choice with Social Interactions

37 Pages Posted: 13 Jul 2009 Last revised: 24 Aug 2009

See all articles by Mary A. Burke

Mary A. Burke

Federal Reserve Bank of Boston

Gary M. Fournier

Florida State University

Kislaya Prasad

University of Maryland - Robert H. Smith School of Business

Date Written: May 8, 2009

Abstract

Location-specific norms of behavior are a widespread phenomenon. In the case of medical practice, numerous studies have found that geographic location exerts a strong influence on the choice of treatments and procedures. This paper shows how the presence of social influence on treatment decisions can help to explain this phenomenon. We construct a theoretical model in which physicians' treatment choices depend on patients' characteristics and on the recent choices of nearby peer - either because there are local knowledge spillovers or because physicians want to conform to local practice patterns. In our model, regional differences in the patient mix give rise to geographically divergent treatment pattern - the treatment a patient receives depends on where she lives. Investigation of Florida data reveals significant geographic variation in treatment rates consistent with the predictions of our model. Implications for patient welfare are explored.

Keywords: geographic variations in medicine, evolutionary game theory, interacting particle systems, social influence, local interactions, medical practice guidelines

JEL Classification: C73, Z13, I10, I11

Suggested Citation

Burke, Mary A. and Fournier, Gary M. and Prasad, Kislaya, Geographic Variations in a Model of Physician Treatment Choice with Social Interactions (May 8, 2009). Available at SSRN: https://ssrn.com/abstract=1432488 or http://dx.doi.org/10.2139/ssrn.1432488

Mary A. Burke (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-3066 (Phone)

Gary M. Fournier

Florida State University ( email )

Tallahassee, FL 30306-2180
United States
850-5915239 (Phone)

Kislaya Prasad

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

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