Abstract
This paper tests for the existence of nonlinearity and reference dependence in income preferences for general practitioners. Confirming the theory of reference dependent utility within the context of a discrete choice experiment, we find that losses loom larger than gains in income for Norwegian general practitioners, i.e. they value losses from their current income level around three times higher than the equivalent gains. Our results are validated by comparison with equivalent contingent valuation values for marginal willingness to pay and marginal willingness to accept compensation for changes in job characteristics. Physicians' income preferences determine the effectiveness of ‘pay for performance’ and other incentive schemes. Our results may explain the relative ineffectiveness of financial incentive schemes that rely on increasing physicians' incomes.
| Original language | English |
|---|---|
| Pages (from-to) | 1020-1038 |
| Number of pages | 19 |
| Journal | Health Economics (United Kingdom) |
| Volume | 25 |
| Issue number | 8 |
| Early online date | 10 Jun 2015 |
| DOIs | |
| Publication status | E-pub ahead of print - 10 Jun 2015 |
Keywords
- contingent valuation
- discrete choice experiments
- general practitioners
- income preferences
- nonlinearity
- reference dependence