Arnold Kling  

The Panel on Crisis of Abundance

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The video from the live event where a panel discussed my book is here. I am reasonably happy with my initial talk.

Jason Furman talks about the large benefits of health care. I think my best answer on that is what I wrote here the other day.

Both Jason and the other discussant, Sebastian Mallaby, complained that putting the onus on the consumer to face the cost of health care would not work well because consumers are irrational and make bad decisions. Others seem to be prepared to pounce on that issue as well.

Consumers make decisions now, and I do not see how insulating them from the cost makes them suddenly behave rationally and make optimal decisions. We do not have a choice between a regime where consumers make bad decisions and a regime where medical decisions are made optimally. The real choice we face is between a regime where consumers make decisions without taking cost into account and a regime where consumers make decisions taking into account cost.

My point is that demonstrating that consumers are irrational does not end the argument. What you need to demonstrate is that irrational consumers make better decisions by ignoring costs than paying attention to them. That seems to me to be a far from obvious case.

If you follow the video or audio all the way through to the Q&A, you will hear a Congressional aide's rant against economic analysis of health care. I chose not to respond, and I think that was the right choice. The book explains why health care is an economic issue, and I would leave it at that. Frankly, I thought that the audience Q&A did not add much. Just as with comments on blog posts, the first one often sets the tone, so that it's important to get a good question first.


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TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/554
The author at Truck and Barter in a related article titled Podcast of the Day-Crisis of Abundance writes:
    Crisis of Abundance: Rethinking How We Pay for Health Care- Arnold Kling’s book presentation at Cato; “If you follow the video or audio all the way through to the Q&A, you will hear a Congressional aide's rant against economic analysis of health ca... [Tracked on September 4, 2006 10:04 PM]
COMMENTS (1 to date)
Jadagul writes:

I believe the argument is that nationalized healthcare causes someone else to make decisisons; if you believe that the consumers are irrational but doctors and politicians are rational, you might want to move the decisions to some sort of bureaucratic apparatus.

This actually ties in with you post on the flat of the curve. I might be willing to spend virtually unlimited amounts of money to only slightly prolong my life; similarly, it's hard to say, "Oh well, Grandma's gonna die in the next year or so anyway; go ahead and pull the plug." But if we have a nationalized system, the doctor can tell me "there's nothing else we can do," and that's that. So we'd eliminate the treatments that typically aren't very cost-effective altogether, and save money.

As I said in the link above, I find this position morally offensive. It also has some other issues, like the potential impacts on pharmaceutical research. But it's not nuts.

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