Consumer Health Information and the Demand for Medical Care

This paper is an empirical investigation of consumer health information. Using a new direct measure of information, the econometric approach treats both information and physician visits as endogenous variables when estimating the demand for medical care. The results show that information increases the probability that a consumer uses medical care, but that conditional on use the quantity of care consumed is not related to information. The results contradict specific implications of models where physicians can create or induce demand for their own services. Several results suggest that poorly informed consumers tend to underestimate the productivity of medical care in treating illness. Copyright 1990 by MIT Press.