Family Spillover Effects of Marginal Diagnoses: The Case of ADHD

The health care system uses patient family medical history in many settings, and this practice is widely believed to improve the efficiency of health care allocation. This paper provides a counterpoint by documenting that reliance on hereditary information can amplify the misallocation of low-value care. We study Attention Deficit Hyperactivity Disorder and show that reliance on family medical history generates a “snowball effect”—the propagation of an original marginal diagnosis to a patient’s relatives. This snowball effect raises the private and social costs of low-value care. (JEL H51, I12, I13, I18, J12, J13)