Information, switching costs, and consumer choice: Evidence from two randomised field experiments in Swedish primary health care

Consumer choice policies may improve the matching of consumers and providers, and may spur compe-tition over quality dimensions relevant to consumers. However, the gains from choice may fail to mate-rialise in markets characterised by information frictions and switching costs. We use two large-scale randomised field experiments in primary health care to examine if individuals reconsider their provider choice when receiving leaflets with comparative information and pre-paid choice forms by postal mail. The first experiment targeted a representative subset of the 1.3 million residents in a Swedish region. The second targeted new residents in the same region, a group expected to have less prior information and lower switching costs than the general population. The propensity to switch providers increased after the interventions in both the population-representative sample (by 0.6-0.8 percentage points, 10-14%) and among new residents (2.3 percentage points, 26%). The results demonstrate that there are demand side frictions in the primary care market. Exploratory analyses indicate that the effects on switching were larger in urban markets and that the interventions had heterogeneous effects on the type of providers chosen, and on health care and drug consumption. (c) 2021 Published by Elsevier B.V.

Automated summary

The study used two large-scale randomized field experiments in primary health care to investigate whether individuals reconsider their provider choice when receiving leaflets with comparative information and pre-paid choice forms by postal mail. The results showed that consumer choice policies may increase the propensity to switch providers and revealed demand side frictions in the primary care market.