Medical Education and Societal Needs A Planning Report for Health Professions (1983) / Chapter Skim
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9. The Influence of Economic Factors on Medical Students' Career Choices
9. The Influence of Economic Factors on Medical Students' Career Choices
Pages 224-242
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From page 224... ...
Idiosyncratic behavior, although it may be important, is treated as random noise; thus, some of the richness and complexity is lost in the attempt to explain the average response of a dependent variable in relation to several independent variables. Economic research relies more heavily on observed behavior than on stated intentions or motivations.
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From page 225... ...
Medical Education as an Investment The conceptual framework underlying research by economists on medical students' career decisions is that medical education is an investment.3 That is, medical education involves an expenditure of time and money in the present that yields a stream of benefits in the future. The time and money costs of medical education act to discourage the potential student from making the investment; the future stream of income and other benefits encourage the investment.
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From page 226... ...
The most common comparison group is college graduates, in which case the result is the return on the additional investment in medical education. The comparison group also can-be chosen from other occupational alternatives such as law or dentistry.
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From page 227... ...
Census data on median incomes of white male college graduates served as estimates of forgone earnings of medical students. Physician earnings for this period were estimated with data from Medical Economics.
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From page 228... ...
Had he used real interest rates, which tend to be in the range of one to three percent, or nominal earnings, the estimates would have been higher. Using a similar methodology, Feldman and Scheffler estimated that the rate of return to medical education, using male college graduates as the comparison group, was 22 percent in 1970.7 Physicians' average pretax incomes by age were taken from the AMA Seventh Periodic Survey of Physicians.
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From page 229... ...
o co CJ -c c cn z o en cn In LJ <¢ C9 ~ u' ·" ~ ¢ In In v ~ Jo In ~ In ~ ., au Id ~ ¢ an In o 0 :~: as ¢ ~ o lo ~ a ¢ 0 o C)
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From page 230... ...
However, the physician work-hours used for the adjustments may have been high and thus the net present value too 1OW.l3 The precise dollar figures in Table 1 are less important than is the general message: a number of researchers using different data and methods have found that, on average, medical education is an excellent investment; only law is reasonably close to medicine in its economic returns. This f inding holds, whether the comparison is with college graduates or with college faculty, in which case total years of schooling are much closer to those for medicine.
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From page 231... ...
oh o g at: 2 Cal v :~: c c 0 c o In Cal z lo: I Cal V o ~ o 0 o Z D o A: 1 _.
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From page 232... ...
5 percent decline in the number of applicants. The largest effect on the number of applicants was exercised by GRAD, the number of male college graduates, a rough measure of the size of the pool from which medical students were drawn at that time.
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From page 233... ...
However, the size of the coefficient is very small. Sloan's analysis, by including measures of the costs of medical education and physician earnings, implicitly employed the investment framework discussed above.6 Feldman and Scheffler explicitly incorporated it in their analysis of the number of applicants to medical school for the period 1956 to 1966.7 They tested the hypothesis that the number of applicants in a given year t was a function of the average rate of return for that year and to the perceived probability of acceptance with the model: APPt ~ be + blRATEt ~ b2ENROLLt + eT where the probability of acceptance is measured by current medical school enrollments (ENROLL)
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From page 234... ...
While the average economic returns to medical education are very good in comparison with those to other educational investments, there is a great deal of individual variation in education costs and in physicians' lifetime earnings. Several studies have computed net present values based on several different levels of education cost, but none has examined differences in earnings except those resulting from specialty choice (discussed below)
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From page 235... ...
Physicians in prepaid group practices also had lower earnings, but not at a level of statistical significance.l7 These results suggest the need for more disaggregated analysis of the returns to medical education in order to account for physician characteristics and for different career paths. Such analyses could indicate that, as a consequence of relatively high education costs and relatively low lifetime earnings, some physicians experience low or even negative economic returns.
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From page 236... ...
Thus, the economic value of the investment in specialty training is calculated as the present value of the difference in lifetime earnings between the specialist and general practitioner (or between one type of specialist and another) , leas the costs of training in the form of forgone earnings.
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From page 237... ...
or to ~ o ~ o ~ 0 ~ ~D u~ ~ ~ ~ - ~ ~ ~o mo ~S: ~ O ~ iD ~ ~ r~ O C?
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From page 238... ...
Economic Returns and Specialty Choice Sloan9 studied the influence of economic returns on specialty choice, using ordinary least squares regression to estimate the parameters of the following model: Residentsit ~ he + blLifetime Earningsit_ + Residenciesit + b2 FMGS + en'. In this model, i indexes the specialty and t the year.
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From page 239... ...
FIGURE ~ Sates of Growth In Net Income from Practice and Abets of Pbysiclans, Selected Specialtles, 1976-1981. z c 50 _ 40 _ 30 z at c A: it it lo' a: 1 1 1 tNT£~N L HE D'CtNE · P£D'&TR1CS 20 t I 10— 1 ol o AN£ST - ES lOLO~ Y TALL S.ECIALTIES PS~C - tAtRv — R^D'OLOG~ ~ 1 1 1 ' 1 1 0 20 30 40 50 I · · O8-G~N S~RGER Y · GENER&L PR^CT.CE I ~ ~ ,, 1 90 1 00 60 70 80 PERCENT INCREAS£ 1N NET INCOM£ FROM PRACTICE SOURCES: Goldfarb, D
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From page 240... ...
This analysis employed rather old data and pioneering statistical methods that have yet to be widely used, and thus the f indings should be viewed as preliminary. Further work on specialty choice, employing discrete choice models, is needed to evaluate the inf luence of economic returns.
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From page 241... ...
A Lifetime earnings and physicians' choice of specialty.
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From page 242... ...
Hay, J "Selectivity Bias in a Simultaneous Logit-OLS Model : Physician Specialty Choice and Specialty Income, " presented at Harvard Conference on Econometric Modeling, April 1981.
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