David R. Henderson  

Zycher on Gruber

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When L'Affaire Gruber began two weeks ago, Tyler Cowen challenged us to stick to discussing Gruber's economics rather than his personal failings. I took up the challenge here, pointing out that Gruber's willingness to mislead could explain what looked like some pretty bad analysis that one would not expect a tenured MIT professor to make.

Now Ben Zycher, a fellow UCLA Ph.D., has done so also--and does it magnificently. His piece, "Gruber's bad political analysis driven by bad economics," is not long and so I recommend the whole thing. A choice excerpt:

Instead, let us focus on a larger reality: Professor Gruber practices rather poor economics.

Can that possibly be true of a full professor at M.I.T.? Well, yes. Economists may disagree about many things, but absent among them is the central role of incentives as determinants of behavior, an eternal truth that applies fully to government. In the context of ObamaCare, government has interest groups rather than patients, and dollars not spent on a given constituency can be spent on others. Accordingly, government as a buyer of medical goods and services -- or as a rule-maker for the ObamaCare exchanges and the insurers participating in them -- has incentives to opt for lower-priced alternatives over higher-priced ones in ways that do not reflect the incremental advantages of the latter, if any. In particular, the drive to reduce explicit budget costs -- to claim that the ACA is producing efficiencies -- biases choices in favor of current budget savings at the expense of benefits enjoyed by the beneficiaries of a given program, even relative to the decisions that patients would make if confronted with the full costs of their choices. That the CBO estimates of budget costs themselves are biased by an expansion of price controls, whether explicit or implicit, makes matters worse by exacerbating the confusion of budget outlays with true resource costs. Nor does Gruber make any adjustment for the inefficiency costs ("excess burden") of the tax system used to pay for expanded public insurance programs.


HT2 Don Boudreaux.


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COMMENTS (5 to date)
Lee Waaks writes:

I think there is a tendency among social democrats to advance their agenda with the implicit understanding that all these costs will come out in the wash in the long run, so long as they have the power to make their preferred adjustments in the future. Social democracy is always their primary allegiance.

MG writes:

Excellent article.

To paraphrase and repurpose the old Seinfeld joke:

"So, do you take offense to Dr Gruber's comments, as a voter?"
"No, I take offense to Dr. Grubber's work, as an economist".

By the way, since you did suggest in your previous post (perhaps, tongue in cheek?) that Dr. Grubber's compensation (you mentioned about $400,000) raises the bar against which to judge the competence of his analysis...

Well, additional developments have raised the bar even higher:

see http://dailysignal.com/2014/11/19/millions-dollars-jonathan-gruber-got/

I hope this is still economics: Is there a point beyond which "well compensated" should be distinguished form "profiteering".

RogC writes:

When a professional, especially one hired on the public's dime, is revealed as a mountebank then it is entirely appropriate to publicize the revelation. Everyone must at times depend on the advice or analysis of other professionals. There is nothing wrong and much right about including discussion about their willingness to be deceptive. Character remains the first quality to know about anyone.

Don84 writes:

The institution for which Dr. Gruber works doesn't get off Scott free. MIT is also raking in millions of government cash for its espousal of Obamacare. And while we're looking at MIT's profiteering, we should look at its total commitment to the global warming hysteria. That rakes in tens of millions of government largesse.

Kent Lyon writes:

Thomas Jefferson has the first word: "Were we directed from Washington when to sow and when to reap, we should soon want bread."
In the context of L'Affaire Guber, he would undoubtedly have said: Were we directed from Washington for our medical care, we should soon be sicker or dead.
Alas, the Founding Fathers and the Constitution they wrote, the greatest document of human liberty in human history, are considered as dross by such grubbers as Gruber, nothing but obstructions to the work of True Believers with a minimalist view of human worth, who believe ends justify means.
Will Congressional hearings ever get to inspect the innards of Gruber's black box models? Or are they as sancrosanct as the raw data at East Anglican University regarding Global Warming models? Or as arcane as all those sophisitcated programs that decided the level of risk of mortgage backed securities?
We've gone beyond Feyerabend's "Tyranny of Experts" all the way to the "Destructive Imbecility of Experts." Experts are not just curtailing our liberty. They are destroying our economy and society. And, as per Gruber, they have no shame, no remorse, no conscience, and no ability to even begin to admit both their imbecility and their maliciousness.

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