Medical pricing decisions: Evidence from Australian specialists

We examine the pricing behaviour of medical specialists in a setting where fees are unregulated and patients receive a fixed subsidy from the government. We use eight years of specialist-level panel data from the Medicine in Australia Balancing Employment and Life (MABEL) survey. We find that local competition is not associated with a specialist’s willingness to accept the fixed subsidy as full payment nor with the level of fee charged above the subsidy. Instead, we show that fees are associated with specialists’ personality traits. Specialists who score more highly on agreeableness are more likely to accept the government subsidy as full payment, while those who score more highly on conscientiousness and neuroticism are less likely to do so. Furthermore, higher neuroticism scores are associated with higher fees.