This paper develops and applies a model in which doctors have two dimensions
of skill: diagnostic skill and skill performing procedures. Higher procedural skill
increases the use of intensive procedures across the board, while better diagnostic
skill results in fewer intensive procedures for the low risk, but more for the high
risk. Deriving empirical analogues to our theoretical measures for the case of C-
section, we show that poor diagnosticians can be identified in the data and that improving diagnostic skill would reduce C-section rates by 15.5% in the bottom
half of the risk distribution, and increase them by 5.5% in the top half. Such an
change in the allocation of procedures would improve birth outcomes among all
women.
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