Physician Social Networks and Geographical Variation in Care”, unpublished working paper

This paper shows how social influences on individual decisions help resolve a public health puzzle–the inordinate effect of geography on treatment. To explain geographical variations, we construct a model in which physician choices are subject to social influence. Small regional differences in the patient population mix give rise to divergent treatment patterns–the treatment a patient receives depends on where she lives. The empirical analysis uses data from Florida on coronary patients and their doctors. The data reveal significant geographic variation in the treatment rates. We find empirical support for the claim that local social influences determine treatment choice. ∗The authors wish to thank Peyton Young, who brought the geographical variation puzzle to our attention, and Dennis Epple for comments on an earlier draft. We also wish to acknowledge participants of the 13th Annual Conference on Health Economics, and at seminars at the Brookings Institution, th