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The Other Ex-Ante Moral Hazard in Health: You are too Healthy
If you catch a disease or condition, and therefore you make the number of sufferers from that condition more numerous, the chance they will find a cure or partial solution is much greater. That benefits many other people, not just yourself. In other words, you will overinvest in being healthy. There is much more here.
Posted by Tyler Cowen on March 21, 2008 at 06:46 AM in Medicine | Permalink
Comments
From their abstract: "current Medicare subsidy for obesity therefore appears to be approximately optimal." Aren't we going a bit nutty on the utilitarianism now? What's next, government subsidizing of our winter and spring break trips to tropical areas so we can contract Dengue Fever, River Blindness, and all manner of tropical diseases that are woefully under-researched?
Posted by: wintercow20 at Mar 21, 2008 8:48:38 AM
Wouldn't this be analogous to lamenting rising wages, because people can then buy more leisure (i.e., backward-bending labor supply curves), which would in turn reduce economic output (i.e., because you're not working as much)? Oh the horror of rising wages!
Posted by: KipEsquire at Mar 21, 2008 9:05:31 AM
Hmm. Seems like this would apply much more to non-communicable diseases and conditions, no? I suppose that this may work for obesity. While it does show some properties like communicable diseases, mostly it seems because having obese friends reduces the stigma of obesity, I would think that that for most diseases the problem of spreading the disease outweighs the "increased spending on a cure."
I guess there could be exceptions for rich people, including people in rich countries, getting conditions normally reserved for poor people, as wintercow20 notes.
Actually, I guess by that reasoning if global warming means a spread of malaria to currently wealthy countries, then that could have net benefits for people in poor countries who already have malaria.
Posted by: John Thacker at Mar 21, 2008 9:13:52 AM
And if people weren't so careful around windows, it would promote innovation in the shatter-proof glass industry.
Posted by: anon. at Mar 21, 2008 9:35:40 AM
This does not make economic sense. Our ability to find a cure to the disease is not
increased by an additional person being afflicted. It is only our incentive to cure
the disease that is increased. Increasing our incentives to cure diseases is not an
inherent good. Curing the disease is an inherent good, but whether there are more
or less sick people, it will still cost the same amount in investment in medical
research. Additional sick people does not change that.
Posted by: Tim R at Mar 21, 2008 9:57:27 AM
Is this point different than the one Schelling made in his article "Hockey Helmets, Daylight Savings, and Binary Choices."?
Posted by: michael webster at Mar 21, 2008 11:36:49 AM
This silly argument assumes that markets (even more unlikely -- government) work. The hottest field for med students is demotology -- they would rather give botox shots than find a cure for cancer.
Posted by: David Zetland at Mar 21, 2008 11:43:56 AM
Tim R- you're exactly right. Thanks for articulating what I couldn't quite put my finger on.
Posted by: Chuck at Mar 21, 2008 1:22:03 PM
Tyrone, is that you?
Posted by: Jacqueline at Mar 21, 2008 3:05:19 PM
It doesn't help me at all to get sick. It helps me if other people get sick and they or their government spends a lot to treat them.
But what helps me far more is if their government spends money on research that will lead to a cure. A dollar on research does far more to bring about a cure than a dollar on treatment.
Also, you are best off delaying the onset of disease because advances across a large range of technologies make the discovery of cures easier to accomplish.
Infectious diseases that have good treatments are different. Your interest there is for people not to get sick because every time an antibiotic gets used we move closer to the emergence of pathogens that are resistant to it.
Posted by: Randall Parker at Mar 22, 2008 4:15:11 PM
