Working Paper: NBER ID: w24955
Authors: Janet M. Currie; W. Bentley Macleod
Abstract: Treatment for depression is complex, requiring decisions that may involve tradeoffs between exploiting treatments with the highest expected value or experimenting with treatments with higher possible payoffs. Using patient claims data, we show that among skilled doctors, using a broader portfolio of drugs predicts better patient outcomes, except in cases where doctor’s decisions violate loose professional guidelines. We introduce a behavioral model of decision making guided by our empirical observations. The model’s novel feature is that the tradeoff between exploitation and experimentation depends on the doctor’s diagnostic skill. The model predicts that higher diagnostic skill leads to greater diversity in drug choice and better matching of drugs to patients even among doctors with the same initial beliefs regarding drug effectiveness. Consistent with the finding that guideline violations predict poorer patient outcomes, simulations of the model suggest that increasing the number of possible drug choices can lower performance.
Keywords: health economics; decision making; learning; human capital
JEL Codes: I1; I12; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher diagnostic skill (C52) | Greater diversity in drug choice (C35) |
| Greater diversity in drug choice (C35) | Better patient outcomes (I11) |
| Skilled doctors (I11) | Greater diversity in drug choice (C35) |
| Dispersed prescribing practice among skilled doctors (I11) | Better patient outcomes (I11) |
| Dispersed prescribing practice among less skilled physicians (I11) | No correlation with better outcomes (G40) |
| Violating prescribing guidelines (Z28) | Worse outcomes for all patients (I14) |