Health Spending: Individual vs. Aggregate

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From an NYT article on Obamacare,

“I’m always curious when I read this ‘good news’ that health costs are moderating, because my health care costs go up significantly each year, and I think that’s a common experience,” said Mark Rukavina, president of Community Health Advisors in Massachusetts.

While much of the focus in the past has been on keeping premiums manageable, “premiums now tell only a part of the story,” Mr. Rukavina said, adding: “A big part of the way they’ve kept premiums down is to shift costs to patients in the form of co-pays and deductibles and other types of out-of-pocket expenses. And that can leave patients very vulnerable.”

Pointer from Tyler Cowen.

I find that the simplest way to explain health care policy is to say that as individuals what we want is unlimited access to medical services without having to pay for them. To the extent that we have our way, the overall spending on health care in the economy will be very high. To limit overall spending, either (a) we have to pay more as individuals, so that we ration ourselves, or (b) our access to services must be rationed by others (insurance companies or the government).

The article consists of people complaining about either being limited in terms of access or having to pay more out of pocket. But that is not news. Again, we know that as individuals we want unlimited access without having to pay for services. You could easily have an improvement in health care policy that is experienced negatively by individuals.

Haidt, Capitalism, and Three-Axis Narratives

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Some further thoughts inspired by comments on this post.

1. I don’t think that progressives would be comfortable with a narrative that says that things used to be better. That is much more of a conservative trope. Also, as an aside, Karl Marx himself said that capitalism saved people from the idiocy of rural life.

2. Instead, I think that progressives have two complaints about capitalism. First, it creates winners and losers. This leads to the winners becoming oppressors and the losers becoming oppressed.

3. The other narrative of capitalism is that it is unorganized and unplanned. It requires oversight in order to correct market failures. I think that this narrative does not fit in with the language of oppressor-oppressed.

4. I think that Randazzo have the libertarian narrative for capitalism correct. It is consistent with freedom and its success demonstrates the virtues of a free society.

5. I think that one of the commenters on the post suggests a reasonable conservative narrative. However, I think that conservatives feel some ambivalence toward capitalism. It is a civilizing force primarily because it rewards effort, individual responsibility, and self-discipline. However, it is an anti-civilizing force to the extent that it promotes greed and elevates materialism over values that ought to be higher.

Obesophobia

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Apparently, Jonathan Gruber says yes. But at Cato Unbound, Christopher Snowdon says no. In response, Russell Saunders says yes. Pointer to the Cato Unbound issue from Jason Collins.

I have not yet read the essays. We decided to take a break from winter and drive down to Florida. As we went through Virginia, the Carolinas, and Georgia, the population did seem to get older and more obese. I know that many of my progressive friends would be disgusted by the obesity, but that does not make it a public policy problem. You can complain about paying for obese people’s health care, but why not just let insurance companies determine the charge for that, rather than treating it as a tax issue?

People have strong tastes about their associations. San Franciscans have a revealed preference for segregated schools (link from Tyler Cowen).

In Florida, my casual observation is that the buildings with the guards are in affluent neighborhoods in communities that are miles from any urban diversity, and the buildings in the urban diverse neighborhoods have less security. I attribute that to selection bias–people who are comfortable with diversity are less xenophobic.

I can imagine that if it were conservatives rather than progressives who were offended by obesity, then the term obesophobia would be in widespread use in the liberal media.

Campus Bias

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Daniel Little writes,

For anyone who cares about universities as places of learning for undergraduate students, Gross’s book is an encouraging one. He provides a clear and convincing explanation of the mechanisms through which a non-random distribution of political attitudes wind up in the population of university and college professors, and he provides strong evidence against the idea that universities and professors exercise discriminatory bias against newcomers who have different political identities. And finally, Gross’s analysis and my own experience suggests that professors generally conform to Weber’s ethic when it comes to proselytizing for one’s own convictions in the classroom: the function and duty of the professor is to help students think for themselves

Pointer from Mark Thoma. Not surprisingly, I disagree. One anecdote I tell is from the graduation of one of my daughters. The main graduation speaker mentioned that she had just seen in article saying that the population of the U.S. will be majority-minority by 2050. The students erupted into whooping and wild cheering.

To me, the demographic projections are facts rather than cause for joy or sorrow. But after four years of being told that white people are the oppressors and minorities are the oppressed, the students reacted automatically and emotionally. To me, it was the opposite behavior of someone who has been taught to think for themselves.

If liberal professors are not aware of political bias in their workplace, it is because, like fish, they are swimming in it. The indoctrination into the language of oppressor-oppressed is pervasive. If you don’t buy into the progessive mindset, then you feel about as comfortable on a liberal college campus as an atheist in a seminary.

Education Voucher Implementation Issues

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Neerav Kingsland has thoughts here. For example,

Enrollment targets would be required to be uniform across grades; i.e., you couldn’t offer hundred kindergarten slots but only fifty fourth grades slots. This would prevent schools from using selective attrition to weed out tough to serve kids. Moreover, it would force each school to equally share the burden of midyear enrollees.

I thought about some of these issues fifteen years ago. For example,

Determining the size of supplements for learning disabilities would be a challenge. As best as I can figure it, some government bureaucracy would have to identify the most desirable level of supplementary funding for a given disability. For example, the government might decide that a certain disability requires 40 hours a year of tutoring, at $25 an hour, or $1000 in additional spending. Then parents of children with that disability would receive an additional $1000 in voucher money.

In general, I think that it is better to use pricing mechanisms rather than rules to address fairness issues.

Randazzo and Haidt on Economists, Left and Right

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In the EconJournalWatch symposium, they write,

There are two basic narratives about capitalism circulating in Western society today. One says that capitalism is exploitation (or at least is highly conducive to exploitation); the other says that capitalism is liberation. If you endorse the exploitation narrative, then you are more likely to see government as the main force that protects innocent victims. It protects them with a welfare state and with a regulatory state. But if you endorse the liberation narrative, then you’ll want government to step back as much as possible and let capitalism work its magic. You’ll want to shrink both the welfare state and the regulatory state.

This is somewhat congruent with the three-axis model. In my terminology, your basic economic narrative is oppressor-oppressed or freedom-coercion.

As they themselves admit, the narrative that they provide for economists on the left is not something they would recognize as characterizing their own views. It would fail Bryan Caplan’s ideological Turing test.

I believe that most economists on the left believe that there are incentive problems in markets and that technocrats can fix those problems. They do not think of markets as intrinsically about exploitation.

Randazzo and Haidt argue that economists’ moral views can predict their economic analysis.

our survey data shows that responses to moral propositions can be used to predict responses to empirical (positive) economic theory propositions. For example, how much importance an economist assigns to the moral foundation of “care” predicts views on whether austerity is good or bad for economic growth, whether a single-payer healthcare system would reduce national healthcare costs or not, whether minimum-wage laws benefit or harm workers, and whether or not national debt and deficits adversely affect economic growth.

My Explanation for Economists’ Divergent Beliefs

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In the new EconJournalWatch, editor Daniel Klein asked a symposium of economists to explain why

In the United States, on matters of the welfare state and the regulatory state, virtually no economist favors one while opposing the other.

I gave what I thought was the most obvious and straightforward answer.

Economists for whom market failure is relatively more salient and government failure is relatively less salient will tend to favor government activism, and conversely.

If you are interested in more elaboration, read the rest of my essay.

Facts do not change Minds

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Scott Sumner tries,

Here we have not only the economy reacting to the Great Austerity Experiment better than predicted by the CBO, but even far better than predicted if there were no austerity.

Does this ring a bell? Do you remember the Great Stimulus Experiment of 2009? The time that the unemployment rate didn’t just rise much more than expected in response to the stimulus, it rose far more than expected under the alternative scenario of no stimulus!

Do you think that Jared Bernstein is going to change his mind because of these facts? I don’t.

Granted, I don’t think that anyone should completely change their mind based on macroeconomic observations. There is too much causal density to take any empirical evidence as definitive. But by the same token, no one is entitled to hold a view of macroeconomics without a scintilla of doubt. I wish that more commentators were willing to allow that there is a significant probability that they are wrong when it comes to macro.