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07/20/2009

Adverse Hazard, Moral Selection, Whatever, by Bryan Caplan

As far as I can tell, economists are even more sympathetic to socialized medicine than laymen.  The question that sticks in my mind is: Why?  Economists are normally calm and analytical.  When it comes to government provision of health care, though, they rely almost exclusively on a simplistic, angry mantra: "Moral hazard and adverse selection."  When another economist points out that (a) government provision doesn't do anything about moral hazard, and (b) selection in insurance markets is usually advantageous, not adverse, the dialog usually (though not always) ends.

All this suggests that economists' arguments in favor of socialized medicine are largely rationalizations of a policy that they favored long before they studied economics.  Since most other economists favor the same policy, they can safely defend it with awfully sloppy economics.

If I cornered the typical economist who defends socialized medicine, I suspect he'd say something like, "It's not economists' job to question political ends.  Our job is to help people achieve their political ends as efficiently as possible.  If people want socialized medicine, we have to help make it work as well as possible."*  To which I'd reply, "You don't say that when you're criticizing rent control, or protectionism, or labor market regulation.   You criticize political ends all the time."  If they quibbled, I'd add: "Perhaps to be more precise, you recognize that most 'political ends' are themselves debatable means to more fundamental political ends.  So why not debate this one, too?"

OK, so why not?

* I once heard a health econ textbook author say, "Yes, universal coverage would have little effect on health.  But if most people wanted universal balloon ownership, I'd tried to figure out the cheapest way to give it to them." 


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