Social interactions in inappropriate behavior for childbirth services:Theory and evidence from the Italian hospital sector

Over the last decades the role of social interactions has become increasingly important in theeconomic discussion and, by now, it is acknowledged that the interaction across agents canproduce both positive and negative effects. In this paper we evaluate the role of socialinteractions in the hospital sector using the large incidence of cesarean section, usuallyconsidered an inappropriate outcome in the childbirth service. In doing so, we lay out atheoretical model of hospitals’ behavior where the effect of peers’ behavior emerges by thesimple sharing of the same institutional authority. Then, using the risk adjusted cesareansection rate of a large panel of Italian hospitals, we empirically investigate whether thebehavior of each hospital is affected by the behavior of hospitals within the same region, aftercontrolling for demand, supply and financial factors. In particular, we perform our empiricaltest employing both peer effects estimate and the spatial econometric approach, exploiting thepanel dimension of our data. Both estimates show a significant and strong presence of peereffects among hospitals, robust to sensitivity analyses. We interpret this evidence as a largepresence of constraint interactions in the healthcare sector, with important implications forthe healthcare policy.