NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Learning and the Value of Information: Evidence From Health Plan Report Cards

Michael Chernew, Gautam Gowrisankaran, Dennis P. Scanlon

NBER Working Paper No. 8589
Issued in November 2001
NBER Program(s):   HC   PR

We estimate a Bayesian learning model in order to assess the value of health plan performance information and the extent to which the explicit provision of information about product quality alters consumer behavior. We take advantage of a natural experiment in which health plan performance information for HMOs was released to employees of a Fortune 50 company for the first time. Our empirical work indicates that the release of information had a small but statistically significant effect on health plan choices, causing 3.1% of employees to switch health plans. Although consumers were willing to pay an extra $267 per year per below average rating avoided, the average value of the information per employee was only $10 per year. The relatively small impact of the ratings arises because the ratings were estimated to be very imprecise measures of quality. More precise measures of quality could have been more valuable.

download in pdf format
   (2018 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (2018 K) or via email.

This paper was revised on September 6, 2006

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Chernew, Michael, Gautam Gowrisankaran, and Dennis P. Scanlon. "Learning and the Value of Information: Evidence from Health Plan Report Cards." Journal of Econometrics 144, 1 (May 2008): 156-74.

Users who downloaded this paper also downloaded these:
Dranove, Kessler, McClellan, and Satterthwaite w8697 Is More Information Better? The Effects of 'Report Cards' on Health Care Providers
Cutler, Huckman, and Landrum w10489 The Role of Information in Medical Markets: An Analysis of Publicly Reported Outcomes in Cardiac Surgery
Angeletos, Iovino, and La'O w17229 Cycles, Gaps, and the Social Value of Information
Geweke, Gowrisankaran, and Town w8497 Bayesian Inference for Hospital Quality in a Selection Model
Chernew, Gowrisankaran, McLaughlin, and Gibson w9847 Quality and Employers' Choice of Health Plan
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us