Information, switching costs, and consumer choice: Evidence from two randomised field experiments in Swedish primary health care☆

https://doi.org/10.1016/j.jpubeco.2021.104390Get rights and content
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Highlights

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    Information frictions and switching costs may reduce benefits of consumer choice policies.

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    We study two randomised information interventions in Swedish primary care.

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    Treatment groups received information on providers; a subset also got a choice form.

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    Treated were more prone to switch providers; the choice form seemed to affect choices.

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    Results suggest treatment affected the matching between patients and providers.

Abstract

Consumer choice policies may improve the matching of consumers and providers, and may spur competition over quality dimensions relevant to consumers. However, the gains from choice may fail to materialise in markets characterised by information frictions and switching costs. We use two large-scale randomised field experiments in primary health care to examine if individuals reconsider their provider choice when receiving leaflets with comparative information and pre-paid choice forms by postal mail. The first experiment targeted a representative subset of the 1.3 million residents in a Swedish region. The second targeted new residents in the same region, a group expected to have less prior information and lower switching costs than the general population. The propensity to switch providers increased after the interventions in both the population-representative sample (by 0.6–0.8 percentage points, 10–14%) and among new residents (2.3 percentage points, 26%). The results demonstrate that there are demand side frictions in the primary care market. Exploratory analyses indicate that the effects on switching were larger in urban markets and that the interventions had heterogeneous effects on the type of providers chosen, and on health care and drug consumption.

Keywords

Information friction
Switching costs
Consumer choice
Field experiment
Primary care

JEL codes

D89
I11

Cited by (0)

☆

Acknowledgements: We would like to thank the editor, Keith Marzilli Ericson, and two anonymous reviewers for suggestions that improved the paper. This study would not have been possible without close collaboration with staff at Region Skåne. We are in particular grateful to Magnus Kåregård and Carina Nordqvist Falk, who were involved and had final say in every step of the development and implementation of the intervention. We also thank Alexander Dozet, Per Fehland and Liv Remitz for helping us with data, delivery, and design of the information material. We are also thankful to Martin Bøg, Dennis Petrie, Visa Pitkänen, Erik Wengström, Ge Ge, and seminar participants at University of Southern Denmark, University of Gothenburg, SFI Advisory Board conference, 2016 SHEA conference, 2016 NHESG conference, 2016 Swedish national conference in Economics, Research Institute for Industrial Economics, the 8th Swedish Workshop on Competition and Public Procurement Research, KORA, SFI-Lund Workshop in Health Economics, Monash, HELED, 2017 IHEA conference, the 2019 ASHE conference, 2019 EALE conference, IAB-workshop on field experiment in policy evaluation, and the Health Economics Workshop in Stralsund for helpful comments. Financial support from the Swedish Competition Authority (Dnr:316/2013;214/2017) and The Crafoord foundation is gratefully acknowledged.

© 2021 The Authors. Published by Elsevier B.V.