Don’t think like a freak

16 May, 2019 at 21:42 | Posted in Economics | 1 Comment

In their latest book, Think Like a Freak, co-authors Steven Levitt and Stephen Dubner tell a story about meeting David Cameron in London before he was Prime Minister. They told him that the U.K.’s National Health Service — free, unlimited, lifetime health care — was laudable but didn’t make practical sense.

“We tried to make our point with a thought experiment,” they write …

1643.Lebowski.jpg-610x0Rather than seeing the humor and realizing that health care is just like any other part of the economy, Cameron abruptly ended the meeting, demonstrating one of the risks of ‘thinking like a freak’ …

So what do Dubner and Levitt make of the Affordable Care Act, aka Obamacare?

“I do not think it’s a good approach at all,” says Levitt … Purchasing health care is almost exactly like purchasing any other good in the economy …”

Aaron Task

Portraying health care as “just like any other part of the economy” is, of course, nothing but total horseshit. So, instead of “thinking like a freak,” why not read what Kenneth Arrow wrote on the issue of medical care back in 1963 (“Uncertainty and the Welfare Economics of Medical Care,” AER):

Under ideal insurance the patient would actually have no concern with the informational inequality between himself and the physician, since he would only be paying by results anyway, and his utility position would in fact be thoroughly guaranteed. ???????????????????????????????????????????????????????????????????????????????????????????????????????????????In its absence he wants to have some guarantee that at least the physician is using his knowledge to the best advantage. This leads to the setting up of a relationship of trust and confidence, one which the physician has a social obligation to live up to … The social obligation for best practice is part of the commodity the physician sells, even though it is a part that is not subject to thorough inspection by the buyer.

One consequence of such trust relations is that the physician cannot act, or at least appear to act, as if he is maximizing his income at every moment of time. As a signal to the buyer of his intentions to act as thoroughly in the buyer’s behalf as possible, the physician avoids the obvious stigmata of profit-maximizing … The very word, ‘profit’ is a signal that denies the trust relation.

1 Comment

  1. Levitt and Dubner are certainly world class grifters. Maybe not quite in Trump’s class, but getting there

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