Your Money or The Quality of Your Life

Stethoscope with indian rupees

Richard Scheffler University of California, Berkeley


This rather clever paper by Kate Barasz and Peter Ubel has us think about the way a consumer must address the trade off between quality and price. To do this, they set up a very interesting comparison between shopping for a car and shopping for your hip. They do this, of course, tongue in cheek, realizing these are two very different kinds of good, but setting it up this way enables them to let the reader known how different the market is for healthcare. Of course when you buy a car you can easily obtain a consumer rating, manufacturer’s guarantee, and you can test drive it for yourself. Your hip is another matter: although there are ratings of quality, you cannot try it on.

The other thing you will learn by reading this paper is the enormous progress that has been made in the healthcare field in providing consumer information on the prices and quality on the services they use, in the United States and England in particular. There is now a vast amount of information that consumers can use to “shop” for the healthcare services that they need. This paper lets you know where to find this information. This seems all good – but is it? Do consumers really know how to shop for healthcare? Are they fooled by bedside manner, better hospital food, and free parking? Do they know how to process the vast amounts of data and information on health care prices and quality indicators? Will they spend the needed time – or will they be overwhelmed and just ask the doctor? This paper raises all these issues in a novel way which is very insightful.

This is all well and good but do you actually believe that consumers will understand what quality means? Do they know a better hip surgery from a worse one? Or a high quality bypass surgery? Even if we use “star” ratings, would they pick two stars rather than three stars for a heart surgery? Some might, but would you? I doubt it. The question is it worth your life or your ability to walk. Can consumers make this tradeoff? Do we really want them to?

The equity issues are abusive. Higher income people can pay more in the US and get better quality care. The approach the authors suggest ignores this issue. They are mistaken. They need to think about it again – equity and fairness in health care really matters. What they suggest is just unfair.

These are difficult questions and need to be researched. How is quality measured? Are the measures reliable and understandable? The authors are silent on this. But they must speak out – the devil is in the details.

The paper also makes us aware of something we know from behavioral economics: that the framing of a question and the context in particular matters. So it is not only information on quality of healthcare and the price that consumer looks at and trades off, but how this information is actually provided to the consumer – in other words, context. The authors point out something that is important for all those who are interested in how consumers shop: that the context of the information may in fact produce the result. Therefore, they end with a plea for more research and work to be done on context and how the information on quality and price are presented to the consumer.

One can only hope that others will follow up. Consumer driven healthcare is here to stay, at least for a while.


Read the full article “Unhealthy consumerism: The challenge of trading off price and quality in health care”, by Kate Barasz and Peter Ubel, in the May 2018 issue of Behavioural Public Policy here