Bryan Caplan  

Keyhole Surgery with The Undercover Economist

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Happiness and Evolution... "Free to Build": The Best Hope...

I'm joining the chorus of fans of Tim Harford's new book, The Undercover Economist. There's something good on practically every page, and though I furrowed my brow in skepticism every few pages, too, that's a pretty good batting average. As a bonus, the writing sparkles, and the cover is practically ripped from the arresting pages of Pulp Hero.

My favorite part so far is Tim's discussion of "keyhole surgery" and its broader policy relevance:


Keyhole surgery techniques allow surgeons to operate without making large incisions, minimizing the risk of complications and side effects. Economists often advocate a similar strategy when trying to fix a policy problem [You're being awfully generous here, Tim! - BC]: target the problem as closely as possible rather than attempting something a little more drastic.

How, then, can we fix health care?... [I]s there a 'keyhole' solution, which could fix health care without sacrificing the ability of patients to decide how much they value their own eyes?

Harford's keyhole solution: health savings accounts and catastrophic insurance, a la Singapore. Though I think Harford greatly exaggerates the practical importance of adverse selection - and neglects the fascinating evidence of advantageous selection - he's one of the rare people who uses economics to reach new ideas, instead of abusing it to rationalize what he would have thought anyway. Bravo, Tim.


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TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/391
The author at Catallarchy in a related article titled Uncovering the Undercover Economist writes:
    With the long weekend of gluttony and shopping behind us, we’ve got a little special something to wake up your sluggish brains and perhaps even lighten the load on your burdened wallets. When I was in DC earlier this year visiting my fellow Catallarchi... [Tracked on November 28, 2005 7:22 AM]
COMMENTS (1 to date)
PJens writes:

To paraphrase Rodger Lowenstein, from A. King's post of OCT 30,... The drawback to HSA's, remember, is that people are imperfect savers.
To change the current health care payment system, responsibility must be returned to the recipient of the care. A good first step toward doing this is to tax all employer provided health insurance premiums. On second thought, double tax on the employer paid insuarnce. The company ought to pay tax on the premiums and the lazy slep who won't shop for insurance ought to pay a tax too. To encourage people to save more (for anything, HSA's, 401's etc) postitive and negative incentives can be used.
I also point out that more than one "keyhole" may be needed to solve any given problem.

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