Information Heterogeneity and the Demand for Healthcare: Evidence from GPs in England

Do different patient choices reflect what they value or what they know? We study this question using variation created by rounded star ratings for GP practices, which changes the information about providers that patients can publicly observe. Differences in the demand response to these ratings indicate that some groups—notably high-income patients—are better informed about provider quality. We develop an empirical demand model that allows both information and preferences to vary across patients and find that heterogeneity in choice overwhelmingly reflects differences in information. Standard full-information demand models underestimate the gains from improving providers by more than 50%, and fail to capture the incidence of those gains. Low-income and other low-information groups benefit substantially from such improvements even when their observed demand for highly-rated GPs is weak.