It is tempting to interpret the adjusted retention differences by NHSC participation as causal effects of participation in the NHSC programs. However, that would be the case only if (1) NHSC participation is random and (2) participants and non-participants have the same underlying characteristics. As we explained in the previous chapter, this is unlikely to be the case, as participants are a self-selected sample of all providers. Moreover, the sample of non-participants that we constructed may not be representative for the general population of medical providers, given that they may have a strong preference to be in an underserved area and/or serve underserved populations. A more sophisticated empirical approach (which is beyond the scope of this study) would have to control for these currently unobservable characteristics in order to be able to attach a causal interpretation to the estimate on the NHSC indicator variable.
As discussed earlier, the crucial insight of the theoretical model from Chapter VI is that, in most circumstances, retention of NHSC participants in high-need areas will be less than the retention of non-participants. The reason is that the NHSC programs will tend to attract individuals who have a lower average non-pecuniary preference for HPSA locations than individuals who choose the location without the inducement of a loan repayment. Because they have a lower preference for the location, the NHSC participants tend to stay in the HPSA locations at a lower rate after program completion. The countervailing force is that the NHSC may screen applicants on the basis of the strength of their preferences for HPSA locations. The more the NHSC selects applicants on the basis of their location preferences, the smaller the retention differences between participants and non-participants will be. At the limit, retention differences disappear when selection into the program is completely on the basis of preferences.
In light of our theoretical model, all estimates presented in this Chapter provide strong evidence that participation in the NHSC programs is not entirely based on selection by preferences. The implication is that the program attracts, at least to some extent, individuals who would not have gone to HPSAs in the absence of the program. It follows that, somewhat counterintuitively, the NHSC has a bigger effect on person-years of service in high-need areas than in a case when selection into the program is based only on preferences (and as a result there are no differences in retention between participants and non-participants). Furthermore, another implication is that a larger difference between the retention in a HPSA of NHSC participants and non-participants is a sign of program success, not failure.