The average U.S. physician earns $350,000 a year. Top doctors pull in 10 timesthat.
When those simple data points were first presented in 2020, a small subset of physicians came unglued on the microblogging site formerly known as Twitter, slinging personal insults and at least one deeply unflattering photo illustration of an economist.
We couldn’t understand why. The figures are nigh-on unimpeachable. They come from a working paper, newly updated, that analyzes more than 10 million tax records from 965,000 physicians over 13 years. The talented economist-authors also went to extreme lengths to protect filers’ privacy, as is standard for this type of research.
By accounting for all streams of income, they revealed that doctors make more than anyone thought — and more than any other occupation we’ve measured. In the prime earning years of 40 to 55, the average physician made $405,000in 2017 — almost all of it (94 percent) from wages. Doctors in the top 10 percent averaged $1.3 million. And those in the top 1 percent averaged an astounding $4 million, though most of that (85 percent) came from business income or capital gains.
In certain specialties, doctorssee substantially more in their peak earning years:Neurosurgeons (about $920,000), orthopedic surgeons ($789,000) and radiation oncologists ($709,000) all did especially well for themselves. Specialty incomes cover 2005 to 2017 and are expressed in 2017 dollars.
Not all doctors breathe that rarefied air. Even in these peak years, family-practice physicians made around $230,000 a year. General practice ($225,000) and preventive-medicine ($224,000) doctors earned even less — though that’s still enough to put them at the top of the heap among all U.S. earners.
So why did those figures ruffle so many physician feathers?
“A lot of students go into medicine because they want to help patients,” Stanford economist Maria Polyakova told us. Polyakova and economist Joshua Gottlieb of the University of Chicago spent the past five years working on this data in collaboration with Census Bureau economists Kevin Rinz and Victoria Udalova and the University of New Brunswick’s Hugh Shiplett.
She continued: “There is this sense of, well, if you show that physician incomes put them at the top of the income distribution, then you’re somehow implying that they’re instead going into medicine because they want to make money.And that narrative is uncomfortable to people.”
Added Gottlieb: “You can want to help people and you can simultaneously want to earn money and have a nicer lifestyle and demand compensation for long hours and long training. That’s totally normal behavior in the labor market.”
Yale University economist Jason Abaluck notes that when he asks the doctors and future doctors in his health economics classes why they earn so much, answers revolve around the brutal training required to enter the profession. “Until they finish their residency, they’re working an enormous number of hours and their lifestyle is not the lifestyle of a rich person,” Abaluck told us.
On average, doctors — much like anyone else — behave in ways that just happen to drive up their income. For example, the economists found that graduates from the top medical schools, who can presumably write their own ticket to any field they want, tend to choose those that pay the most.
“Our analysis shows that certainly physicians respond to earnings when choosing specialties,” Polyakova told us. “And there’s nothing wrong with that, in my opinion.”
They also found that each 10 percent increase in the Medicare payment rate for a procedure causes a 4.4 percent increase in billing for the procedure — mostly because the doctor will work to find additional patients who could benefit from the now-more-profitable intervention.