Wednesday, June 14, 2006

Labor Negotiations: The Non-Medical Incentives of Childbirth

6-6-06 passed recently with nary an episode of satanic import. Nonetheless, some mothers-to-be, late in the third trimester, did not like the idea of delivering on the Day of the Beast--lest their newborn be mistaken for the spawn of Satan. According to a new research paper by Joshua Gans and Andrew Leigh, physicians were probably open to helping parents avoid the inauspicious date. It's not that physicians feared the delivery of the anti-Christ. Rather, June 6, 2006 fell on a Tuesday--so inducing labor in an expectant mother a day earlier or later wouldn't cut into the doctor's weekend tee-time.

Parents often hope to induce or postpone labor for all sorts of non-medical reasons, ranging from tax purposes (parents in many countries stand to capture a sizable tax credit should their babies pop out before January 1) to cultural reasons (choosing the year of the dog over the year of the pig, or Sagittarius over Capricorn). One particularly inauspicious day to be born on is February 29, since that date occurs only once every four years.

On the other hand, physicians have their own preferences over birth dates. In particular, there is a well-documented "weekend effect" in the timing of births. It's safe to assume that neither babies nor women's bodies know the day of the week; yet according to Gans and Leigh, "nearly 29% fewer births occurred on weekends than an even distribution [over days of the week] would predict." Several recent papers have suggested that the reason for this is that it is more expensive to perform medical procedures on weekends, and also that physicians would prefer not to work on weekends.

Think of what happens, then, when an inauspicious day--like, for example, February 29--occurs on a Monday. In such cases, doctors and patients face potentially conflicting incentives. Expectant parents want to induce labor to avoid leap-year babies and physicians want to avoid working on the weekend. Who wins out?

Read the abstract, introduction, and conclusion of the research paper to find out how the conflict of incentives typically sorts itself out. Follow this link and scroll toward the bottom of the page (under the "SSRN Electronic Paper Collection" heading) to download a pdf of the paper.

1. According to Gans and Leigh, how often do physicians accommodate expectant parents who want to induce weekend labor for non-medical reasons?

2. What do the paper's results suggest about the balance of bargaining power between patients and doctors (or other labor resources at hospitals, such as nurses)? Is the medical services consumer always sovereign?

3. Do expectant parents incur more expenses if they give birth on a weekend, or less? What about doctors and hospitals? How might a pricing scheme that allows hospitals to charge different prices for weekend and weekday births improve the welfare of doctors and patients?

4. Think about the statistical methods Gans and Leigh use to make their point. One might think that for tax reasons, January 1 would be a good date to examine for this effect. Why is February 29 a better date study than January 1 for the purposes of this? (Hint: If you were trying to examine the point Gans and Leigh are looking at, you would need to make sure that only the patients cared about the "inauspicious" day, and that only the doctors cared about the weekend…)

Thanks to Chris Makler for valuable additions to this post.

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