Motivation and Competition in Health Care

Melbourne Institute Working Paper No. 05/17

Date: 2017

Author(s):

Anthony Scott
Peter Sivey

Abstract

Non-pecuniary sources of motivation are a strong feature of the health care sector and the impact of competitive incentives may be lower where pecuniary motivation is low. We test this hypothesis by measuring the marginal utility of income of physicians from a stated-choice experiment, and examining whether this measure influences the response of physicians to changes in competition on prices charged. We find that physicians exploit a lack of competition with higher prices only if they have a high marginal utility of income.