The Challenge of Obtaining Quality Care: Limited Consumer Sovereignty in Human Services

Abstract

This paper offers a conceptual analysis of the problem of quality in human services: in elementary school, psychiatric care, and the health and social care of children, the elderly, and the intellectually disabled. Geriatric nursing home patients are used as a case. These care recipients cannot enforce their legal right to quality service; their quality-effective demand is low. Formal economic analyses often characterize the weak position of the care recipient as an information asymmetry problem. An additional obstacle, however, is the recipient's inability to safeguard her personal interest due to physical, mental, or social incapacities; that is, “limited consumer sovereignty.” Incapacitated individuals cannot enforce quality even when quality information is available. This creates a fundamental incentive problem in the monitoring of quality. They also depend on services that are complex and non-verifiable, making external monitoring difficult. This paper presents a typology of measures to increase the quality pressure facing providers.

Keywords:

• Consumer sovereignty
• care quality
• human services
• impaired consumers
• quality-effective demand
• public supervision
• JEL Codes: I1, I11, I18

Notes

¹I use “verifiability” the way it is used in economic contract theory. Service quality is verifiable if it is possible to specify in a contract (without great costs) all relevant dimensions of quality. Furthermore, these dimensions must be observable by third parties. Such cases are only taken to court if litigation is needed to enforce the contract. The court also settles issues that are not clear-cut verifiable in this sense. Disputes and the need for a court ruling arise because the contract terms or the information available are ambiguous.

²For ease of exposition, the service recipient is assumed to be a “she” in this paper.

³It should be noted that the scarce literature that uses the term “limited consumer sovereignty” does not appear to be in agreement on its definition; see for example, Soonman Kwon (2001) and Peter Kooreman and Henriëtte Prast (2007). Authors often do not make clear precisely what they mean by the term.

⁴The term “low quality-effective demand” is inspired by Keynes's notion of effective demand”. I thank Alice Amsden for suggesting this term.

⁵In the absence of fully effective outside monitoring, low quality-effective demand results in an entitlement failure but of a different kind than that known in the literature and introduced by Amartya Sen (1982). The latter refers to situations in which, given their wealth and productive resources, people are not legally entitled (through production or trade) to a sufficient amount of a basic commodity (food). Low quality-effective demand, on the other hand, refers to the inability of the individual to realize her legally established entitlements or the quality level that the legal requirements are intended to ensure.

⁶One problem is self-serving biases (Linda Babcock and George F. Loewenstein 1997), which may be particularly powerful to the extent to which the close kin feels morally obliged to act as representative. For example, a daughter (or son) of a nursing home patient may deceive herself into believing that her mother's low functioning is due to age and other external factors, when in fact it is caused by apathy and depression in response to the home's neglect of psychosocial quality. For the daughter, the alternatives to self-deception would be guilt and shame, in the case that she did nothing, or it may be lower income and career expectations and less time for her own children, among other consequences, if she really took her advocacy role seriously.

⁷A representative may reduce these personal costs for the recipient: in the case of provider change, the representative may help the recipient to familiarize herself with the new environment; in the case of exiting the market, the representative may enable the recipient to move out of the nursing home by providing or organizing domestic care; and in the case of voice, the representative may prevent retaliation by monitoring care particularly well. In any case, there are personal costs that are borne by the recipient or the representative.

⁸A supervisor may be above the principal in a hierarchical structure. For example, “One may think of instances in which the agent is the police … the principal the convict … and the supervisor the judicial system” (Tirole 1986: 200).

⁹Identification is a powerful, though complex, psychological mechanism; see, for example, Karen E. Jenni and George F. Loewenstein (1997) and Deborah A. Small and George F. Loewenstein (2003).

¹⁰The correlation coefficient between the two psychologists scores ranged from 0.79 to 0.97 (Slagsvold 1998: 297). These independent observational scores were taken to be sufficiently valid on the basis of “what we saw with our own eyes” (Slagsvold 1998: 307) and their high intercorrelations.

¹¹The study only concerned some aspects of the provided service, specifically user involvement in the care-management process.

¹²A non-myopic firm, taking into account that reputation has value in terms of maintaining a high mark-up on costs in the future, may refrain from shirking on quality today.