Feed on

This drives me bananas …

Demanding Customers: Consumerist Patients and Quality of Care by Hai Fang, Nolan H. Miller, John A. Rizzo, Richard J. Zeckhauser – #14350 (HC HE)


Consumerism arises when patients acquire and use medical information from sources apart from their physicians, such as the Internet and direct-to-patient advertising. Consumerism has been hailed as a means of improving quality. This need not be the result.  Consumerist patients place additional demands on their doctors’ time, thus imposing a negative externality on other patients. Our theoretical model has the physician treat both consumerist and ordinary patient under a binding time budget. Relative to a world in which consumerism does not exist, consumerism is never Pareto improving, and in some cases harms both consumerist and ordinary patients. Data from a large national survey of physicians shows that high levels of consumerism are associated with lower perceived quality. Three different measures of quality were employed. The analysis uses instrumental variables to control for the endogeneity of consumerism. A control function approach is employed, since our dependent variable is ordered and categorical, not continuous.


I do not question their results. What I do question is their relevance. Imagine I said to you that “educational consumerism” arises when students acquire and use information from sources apart from their professors, such as the internet, newspapers, library books, and seminars. Many would argue that such behavior, when supplemented with access to teachers and researchers would improve the quality of education.

But hold on! It might not be an improvement. Why?

Because when a motivated and interested student decides to come see me to discuss some economic issue more in depth, it imposes additional demands on Rizzo’s time, and this is a negative externality on the rest of my students. No one would take such a claim seriously. Professors and students would soon develop policies to make sure people were being served properly. But at base, don’t we HOPE that students become more engaged, sophisiticated, interesting, and self-motivated?

  1. What is the policy relevance? Should we pass a law that restricts patients’ abilities to acquire information? That seems even sillier than the University of Rochester demanding that my students ONLY get their economic information from inside of my classroom. Even the most protectionist sentiments inside of me could never even fathom that being reasonable.
  2. My baloney sandwich detector goes off the deep end when I hear the existence of externalities used as justification for some market outcome as being inefficient. Externalities are everywhere. Virtually every single transaction I make imposes costs and confers benefits on millions of people without their consent or knowledge. For example, when I receive a cell phone call, millions of electrons are beaming through all of the folks’ heads around me without their knowledge or consent. Some of my neighbors probably don’t much care for my Cornell Hockey window sticker on my car. Similarly, I bet some of my neighbors get a good deal of pleasure when they smell me making pasta sauce from scratch. I don’t use that as justification for them to subsidize me to make more. The point is, just saying that an externality exists is not adding much information to what we already know, and it certainly does not follow that a prescription is necessary to correct it.
  3. Contrary to what is taught in most economic books, many externalities are effectively mitigated through social mores and customs, but also because some individuals and groups have incentives to do something about them. If we think that inquisitive patients (or students) makes it harder for other patients (students) to access their doctors (professors) is there not some opportunity here for mutual gain? Of course there are … unless the medical and educational systems are cartelized… oops.

The argument in the above paper is that even self-motivated students might be made worse off by engaging their professors. Taking that to be true, what is the source of this negative impact. I assert that is likely is the professor (doctor) – but I have a feeling like policies would be put in place to prevent students (patients) from becoming more knowledgeable, rather than seeking policies that would properly incentivize teachers and doctors to engage such individuals.

One Response to “Replace “Health Care Consumer” with Student”

  1. Campbell says:

    My favorite:
    “Data from a large national survey of physicians shows that high levels of consumerism are associated with lower perceived quality.”

    I guess ignorance IS bliss … until it metastasizes.

    — Campbell

Leave a Reply