Arnold Kling  

Basic Decision Theory

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From my latest essay:


If we give more people MRI's, we reduce type I errors but increase type II errors. If we give fewer people MRI's, we reduce type II errors but increase type I errors.

The Maggie Mahars of the world want to blame such errors on the fact that we have private-sector medicine. However, errors are inherent in medicine, because knowledge is imperfect and decisions must be made under uncertainty. Given the uncertainty, one cannot reduce errors of one type without increasing errors of another type. Most importantly, the existence of errors does not prove that the system is flawed.

UPDATE: Bruce Schneier says,


The data mining success story is in credit cards. The credit card companies use data mining to constantly look at the stream of credit card transactions, and find credit cards that have been stolen. It works because credit card thieves are relatively numerous.

...It doesn’t work well looking for terrorists. The number of terrorists, with respect to the general population, is infinitesimally smaller than the number of credit card fraudsters to the number of credit cards. Also, there is no well-defined profile.


Schneier's view is a counter to my argument for more data mining with regard to terrorism. But we agree that our current approach on airline security makes too many unnecessary type II errors.


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CATEGORIES: Cost-benefit Analysis



COMMENTS (3 to date)

Thanks for calling Mahar out on this. I can't even figure out at this point why anyone let's her get away with the TITLE of the book, since even if we accept her argument, it tells us nothing about the COST of health care, only about the SPENDING on it.

Bruce G Charlton writes:

Nice article.

However, AK says: "More research on medical protocols, such as a recent heart stent study, would help doctors make better decisions."

Masses of this kind of research is being done and has been done for the past couple of decades - the problem is that although the extra information generated has some effect, it doesn't have all that much effect.

Here in the UK there has developed a government-funded command and control healthcare economy which advertizes itself as 'evidence based' and is supposed to provide rational guidance/ mandatory regulation of health protocols. In fact, these organizations make arbitrary decisions as to what counts as evidence, and/ or employ non-transparent methods (eg committees of 'experts') for generating their regulations.

The government agencies have been more or less forced to do this by the fact that the 'evidence' almost never leads to clear, precise, unambiguous and scientifically-valid understanding of medical issues - so in the end decisions get made by sheer assertion (behind a smokescreen of statistical malpractice).

I agree with AK's prescription for health services, but I just don't think that 'more research is needed' is a reasonable recommendation. US medical research funding doubled in the last decade - clearly this can't go on much longer. Soon we will have to do without 'more research'.

www.hedweb.com/bgcharlton/funding

Arnold Kling writes:

Bruce, even though we spend a lot on medical research, I think that if we shifted a billion dollars out of spending on medical services and put that into research on the effectiveness of protocols, there would be a large gain in well-being.

I agree, though, that decision-makers have to have the incentives and know-how to use the results of these studies, or else it gets wasted.

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