In this paper, we explore the sensitivity in the clinical decisions of physicians to the standards of care expected of them under the law, drawing on the abandonment by states over time of rules holding physicians to standards determined by local customs and the contemporaneous adoption of national-standard rules. Using data on broad rates of surgical interventions at the county-by-year level from the Area Resource File, we find that local surgery rates converge towards national surgery rates upon the adoption of national-standard rules. Moreover, we find that these effects are more pronounced among rural counties.
Frakes, Michael and Frank, Matthew and Seabury, Seth A, Do Physicians Respond to Liability Standards? (August 2, 2014). Journal of Institutional and Theoretical Economics (forthcoming).