The Economics of the Refugee Crisis
Chicago Booth’s Andrew Leon Hanna discusses how policymakers should respond to the global proliferation of displaced people.
The Economics of the Refugee CrisisPatients in many developed countries with public health-care systems have to wait a long time for elective surgeries such as hip replacements—a problem that policy makers have tried to tackle in a variety of ways. In British Columbia, for example, officials have made it easier for patients to see the wait times for specific surgeons, and have at times authorized private physicians to perform the most backlogged procedures, a step also taken in countries such as Trinidad and Tobago. But such tactics could potentially make wait times even longer, according to research by Chicago Booth PhD candidate Luyi Yang, Dartmouth College’s Laurens G. Debo, and Booth’s Varun Gupta.
More information and more choice could actually lead to longer wait times, according to a model constructed by the researchers. That’s because patients’ sole priority isn’t necessarily minimizing their wait times. Those on waiting lists also consider the amount of effort they put in to their search for a provider and the quality of the provider they’re willing to choose. Rather than picking a surgeon on the basis of the shortest line, for example, patients may flock to the physician they see as most qualified, regardless of the wait.
If all service providers were of roughly equal quality, wait times would fall when consumers are given information about the length of each provider’s line, the study finds. But if consumers believe some providers are better, being able to spend less time investigating queue lengths means they can devote more attention to those perceived quality differences. This will lead more consumers to choose high-quality providers, and, since they’re willing to wait longer for better service, average wait times could increase, even while queues for the lowest-quality providers get shorter.
Another public-health response to longer queues would be to divert demand to private health systems. But drawing patients away from public systems might mean patients who do stay will crowd toward doctors of higher average quality. Because patients’ willingness to wait increases with the quality of their provider, this process, too, could drive up average wait times.
Publishing queue lengths and adding private physicians to the pool of available providers won’t lead to longer waiting times in every case, however. The researchers note that making the search for a provider easier would increase queue sizes specifically when the difficulty of search is already quite low. Similarly, making private systems available is likely to have adverse effects on wait times only when the public system is already overburdened. Nonetheless, “it becomes increasingly relevant and important that health authorities mitigate severe quality disparity” between doctors in order for policies aimed at reducing wait times to be effective, the authors write.
Luyi Yang, Laurens G. Debo, and Varun Gupta, “Searching for Better Quality and a Shorter Queue,” Working paper, October 2015.
Chicago Booth’s Andrew Leon Hanna discusses how policymakers should respond to the global proliferation of displaced people.
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