These three speci fi cations are repeated for each of the following dependent variables. The fi rst, the analog of Figure 1, is a variable that indicates whether the doctors asked each of 6 questions or performed each of 3 examinations for patients presenting with diarrhea or cough without fever. As discussed previously, these 9 items were vetted by experts as critical to the management of such cases and all 9 had been covered in the vignettes. We relate the doctor’s performance in direct clinical observation to performance in the vignettes. Our measure of competence is the probability of asking the question/performing the examination in the vignettes for each provider-question pair and coefficients are reported for both linear and the random effects probit models (see Appendix 1).

Our second dependent variable is the overall measure of effort presented in the Figures 2 and 4. This variable allows us to make comparisons between effort and competence for the entire sample of doctor-patient interactions, but is less precise since we cannot relate performance in the vignettes to performance in practice for the same set of questions and examinations. The measure of competence used here is the competence index based on the full set of vignettes (Das and Hammer 2005).

Finally, turning to a less benevolent aspect of effort, we also estimate the extent of “poly-pharmacy”, measured as the total number of drugs given to the patient.<sup>24</sup> This is important both for the private costs arising from unnecessary expenditure, risk of resistance to drugs in the patient and unpleasant side effects and the distinct social cost of increasing the resistance of infectious agents to fi rst line (relatively cheap) drugs in the population as a whole. This is a major externality.

# 5.1 Ordinary Least Squares and Propensity Score Estimates

The basic description illustrated in the Figures 1,2 and 4 remains once we account for practitioner and patient characteristics (Table 4). Effort increases with competence so that the joint hypothesis of complementarity of effort and competence along with positive valuation of cure is con fi rmed, both for the 9 tasks that were graded on the vignettes and in observation (Panel A) and the more general measure of effort (Panel B). Effort is lower in the public sector after accounting for differential workloads, patient populations and observed provider characteristics. Finally, public hospitals and other public health-care centers continue to differ, with the former performing signi fi cantly better.

Whether hospitals are better or worse than the private sector depends on the dependent variable. For the 9 tasks (Panel A), the performance of hospitals is signi fi cantly worse than the private sector–F-tests of signi fi cance reject equal performance at 1 percent levels of signi fi cance. For the overall measure of effort, there is no difference between hospitals and the private sector, with F-tests accepting the null at 10 percent con fi dence levels. Finally, 2.6 medicines are prescribed on average per encounter; the private sector prescribes between 20 and 25 percent more medicines than public clinics and hospitals. All results are signi fi cant at the 1 percent level.

> 24 The World Health Organization as part of its program on promoting “rational drug use” suggests a number of ways to assess drug prescription practices. The extent of poly-pharmacy is the easiest and most widely used indicator in these studies (WHO 1993).

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