Choice in public services is controversial. We exploit a reform in
the English National Health Service to assess the effect of removing
constraints on patient choice. We estimate a demand model that
explicitly captures the removal of the choice constraints imposed on
patients. We find that, post-removal, patients became more responsive
to clinical quality. This led to a modest reduction in mortality
and a substantial increase in patient welfare. The elasticity of demand
faced by hospitals increased substantially post-reform and we
find evidence that hospitals responded to the enhanced incentives by
improving quality. This suggests greater choice can raise quality.