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Exploring the Nexus between Certainty in Injury Compensation and Treatment Selection

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  • Paola Bertoli
  • Veronica Grembi

Abstract

We study how legal and financial incentives affect medical decisions. Using patient-level data, we identify the effect of a change in medical liability pressure exploiting the geographical distribution of hospitals across court districts, where some districts improve the certainty of expected damages per injury while others do not. As certainty increases, unnecessary c-sections increase by 20%. This increase is higher for hospitals with lower quality, farther from consumers associations, facing lower expected damages, and paid more per c-section. Combining the difference-in- difference with a regression discontinuity design, we show that the effect is already detectable in the short-run.

Suggested Citation

  • Paola Bertoli & Veronica Grembi, 2017. "Exploring the Nexus between Certainty in Injury Compensation and Treatment Selection," CERGE-EI Working Papers wp603, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp603
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    References listed on IDEAS

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    Cited by:

    1. Paola Bertoli & Veronica Grembi, 2018. "Medical Malpractice: How Legal Liability Affects Medical Decisions," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 235-261, Emerald Group Publishing Limited.
    2. Michael Frakes & Jonathan Gruber, 2020. "Defensive Medicine and Obstetric Practices: Evidence from the Military Health System," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 17(1), pages 4-37, March.

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    More about this item

    Keywords

    scheduled damages; Cesarean sections; difference in difference;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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