Article

“Social Learning and Health Plan Choice.”

Stanford University, USA.
The RAND Journal of Economics (Impact Factor: 1.49). 02/2006; 37(4):1-29. DOI: 10.1111/j.1756-2171.2006.tb00064.x
Source: PubMed

ABSTRACT

I use data from the University of California to empirically examine the role of social learning in employees' choices of health plans. The basic empirical strategy starts with the observation that if social learning is important, health plan selections should appear to be correlated across employees within the same department. Estimates of discrete choice models in which individuals' perceived payoffs are influenced by coworkers' decisions reveal a significant (but not dominant) social effect. The strength of the effect depends on factors such as the department's size or the employee's demographic distance from her coworkers. The estimated effects are present even when the model allows for unobserved, department-specific heterogeneity in employee preferences, so the results cannot be explained away by unobservable characteristics that are common to employees of the same department.

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    • "Instead, experiences are more powerful when shared. Sorensen (2006) claims that there is a role for social learning wherever an individual is surrounded by others and is faced by a problem for which they do not have a clear answer. A practical example provided is a situation in which an individual has intentions of buying a vehicle. "

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    • "Based on the conjecture that individuals may be more likely to interact with co-villagers who share common observable characteristics, we should observe stronger social effects within subgroups than across subgroups in the village (Duflo and Saez, 2002; Sorensen, 2006). If individuals' enrollment decisions are influenced by their observations of others' behavior , there may be opinion leaders in rural villages who appear to have expertise and the ability to make informed NCMS enrollment decisions (Bikhchandani et al., 1998). "
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    • "Epstein and Nicholson (2009) …nd that an increase in the overall c-section rate of a physician's local peer group leads to an increase in his or her own rate. 3 Social learning has been studied widely in a variety of contexts including , but not limited to , employer - sponsored health plan choices ( Sorensen , 2006 ) , retirement plan choices ( Du ‡o and Saez , 2003 ) , welfare program participation ( Bertrand , Luttmer , and Mullainathan , 2000 ) , health care utilization in Milan ( Dev - illanova , 2008 ) , consumption of movies ( Moretti , 2011 ) , and other examples , such as crime and labor market outcomes, which are cited in those studies . his or her peers . "
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