We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
A PRODUCTION FUNCTION FOR DENTAL SERVICES: ESTIMATION AND ECONOMIC IMPLICATIONS.
- Authors
Scheffler, Richard M.; Kushman, John E.
- Abstract
Our initial question was whether the concept of a production function could be useful in understanding behavior in the market for dental services. An immediate answer is "Yes." A regression equation suggested by the concept can explain nearly half the variation in output even on an individual practitioner level. The estimated equation can be used to predict outputs from various arrangements and to estimate implicit wage rates for dentists' time. A large number of behavioral hypotheses are shown to be consistent with the data. For instance, we found evidence of a learning-by-doing effect among young dentists with an increase in slack in the older ages. Both seemed to have a significant effect on productivity with the highest productivity around age 45. <BR> The data used in the analysis provided an extremely large number of observations which facilitates precise estimation of the relationships in the production process. A detailed breakdown of practice time allowed us to correct for technical efficiency. <BR> The lasting importance of the study, however, will have little to do with the parameter estimates. Our analysis provides persuasive evidence that for given prices dentists act as if they maximize profits or the utility of income and leisure. When prices are mandated by insurance, prepayment arrangements, or government programs a model of utility maximization should prove valuable as a guide to policy decisions. Where prices are not mandated, as they are not for most patients in the U.S. today, an overall model of behavior awaits resolution of the pricing mechanism. That resolution must be consistent with the evidence we have presented here.
- Subjects
UNITED States; PRODUCTION functions (Economic theory); COMMUNITY dental services; DENTISTS -- Salaries, etc.
- Publication
Southern Economic Journal, 1977, Vol 44, Issue 1, p25
- ISSN
0038-4038
- Publication type
Article
- DOI
10.2307/1057296