Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending

David Cutler, Jonathan Skinner, Ariel Dora Stern, David Wennberg

NBER Working Paper No. 19320
Issued in August 2013, Revised in February 2018
NBER Program(s):Economics of Aging, Health Care, Health Economics

There is considerable controversy about the causes of regional variations in health care expenditures. Using vignettes from patient and physician surveys linked to fee-for-service Medicare expenditures, this study asks whether patient demand-side factors or physician supply-side factors explain these variations. The results indicate that patient demand is relatively unimportant in explaining variations. Physician organizational factors matter, but the most important factor is physician beliefs about treatment. In Medicare, we estimate that 35 percent of spending for end-of-life care, and 12 percent of spending for heart attack patients (and for all enrollees) is associated with physician beliefs unsupported by clinical evidence.

A non-technical summary of this paper is available in the 2014 number 1 issue of the NBER Bulletin on Aging and Health. You can sign up to receive the NBER Bulletin on Aging and Health by email.

Acknowledgments and Disclosures

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Document Object Identifier (DOI): 10.3386/w19320

Published: David Cutler & Jonathan S. Skinner & Ariel Dora Stern & David Wennberg, 2019. "Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending," American Economic Journal: Economic Policy, vol 11(1), pages 192-221. citation courtesy of