TY  - JOUR
AU  - Jin,Ginger Zhe
AU  - Sorensen,Alan T.
TI  - Information and Consumer Choice: The Value of Publicized Health Plan Ratings
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11514
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11514
L1  - http://www.nber.org/papers/w11514.pdf
N1  - Author contact info:
Ginger Z. Jin
University of Maryland
Department of Economics
3105 Tydings Hall
College Park, MD  20742-7211
Tel: 301/405-3484
Fax: 301/405-3542
E-Mail: jin@econ.umd.edu

Alan T. Sorensen
Department of Economics
University of Wisconsin, Madison
6454 W.H. Sewell Social Science Bldg
1180 Observatory Drive
Madison, WI 53706
Tel: 608/263-3867
E-Mail: sorensen@ssc.wisc.edu
M2  - featured in NBER digest on 2005-08-01
AB  - We use data on the enrollment decisions of federal annuitants to estimate the influence of publicized
ratings on health plan choice. We focus on the impact of ratings disseminated by the National
Committee for Quality Assurance (NCQA), and use our estimates to calculate the value of the
information. Our approach exploits a novel feature of the data%u2014the availability of nonpublic plan
ratings%u2014to correct for a source of bias that is inherent in studies of consumer responsiveness to
information on product quality: since publicized ratings are correlated with other quality signals
known to consumers (but unobserved by researchers), the estimated influence of ratings is likely to
be overstated. We control for this bias by comparing the estimated impact of publicized ratings to
the estimated impact of ratings that were never disclosed. The results indicate that NCQA%u2019s plan
ratings had a meaningful influence on individuals%u2019 choices, particularly for individuals choosing a
plan for the first time. Although we estimate that a very small fraction of individual decisions were
materially affected by the information, for those that were affected the implied utility gains are
substantial.
ER  -