Health Services As Credence Goods: A Field Experiment

Abstract

Agency problems are a defining characteristic of health care markets. We present the results from a field experiment in the market for dental care: A test patient who does not need treatment is sent to 180 dentists to receive treatment recommendations. In the experiment, we vary the socio-economic status (SES) of the patient and whether a second opinion signal is sent. Furthermore, measures of market, practice and dentist characteristics are collected. We observe an overtreatment recommendation rate of 28 % and a striking heterogeneity in treatment recommendations. Furthermore, we find significantly less overtreatment recommendations for patients with higher SES compared to lower SES for standard visits, suggesting a complex role of patients' SES. Competition intensity, measured by dentist density, does not have a significant influence on overtreatment. Dentists with shorter waiting times are more likely to propose unnecessary treatment.

Keywords: Health Care; Credence Goods; Overtreatment; Field Experiment

JEL Classification: C93; D82; I11; L00