Public health and market failures

I'm not particularly worried about any large-scale Ebola outbreaks in the developed world. It's easier in the developed world to run effective quarantine and to track down those who might have been exposed to an infected and contagious person.

That certainly doesn't mean Ebola isn't worth worrying about. The burden of Ebola in Africa looks likely to be huge. Even where the total number of deaths remains very low relative to other African diseases like malaria, Ebola has an incomparable potential to disrupt economic activity. I'd put even odds that economic disruption caused by completely understandable fear around Ebola will kill as many people as the disease itself. When taxicabs become ways of catching disease and hospitals terrifying, and when a worker with flu symptoms could well be somebody who'll kill all your staff if he comes in to work and touches people - it's really not good.

Pandemic protection is a strong public good. Any dollar's investment in pandemic protection protects everybody who could be at risk: it's non-rivalrous. Every dollar spend improving hospitals in Africa, training doctors, providing medical equipment, and developing emergency response protocols is a dollar that protects each and every person in Africa, and by extension the rest of the world where there's risk of pandemics' spreading (think Bangladesh, Pakistan and India, not Europe and America). We all benefit from it. There is then a strong case for government funding of pandemic prevention efforts. There's also a really good case for things like Kickstarter, or PledgeMe, running campaigns on it to also help out.

The World Health Organisation is the outfit that's supposed to have an eye on the ball on this stuff. Unfortunately, in my view, the WHO has gone astray. Or at astray from what it should have been.

In the public health world, the social welfare function is either minimising the number of deaths, minimising incidence of morbidity, or maximising the number of disability-adjusted life-years or quality-adjusted life years. In economics, it's maximising some weighted utility function. The two yield very different outcomes and are what drive my dissatisfaction with the WHO's prioritisation.

Suppose we have several kinds of initiatives that would increase DALYs and reduce the overall burden of sickness and disease. Some of these, like polio eradication, provide health benefits without any particularly large cost as viewed by the person receiving the polio vaccine.* Nobody enjoys having polio. Nobody would voluntarily seek to have polio. If polio ceased to exist, the world would be a better place. Others of these, like regulations on soda, tobacco, alcohol, fatty foods, and salt, can increase DALYs and reduce the overall burden of sickness and disease too, but they come at a cost in terms of private experienced consumption benefits: many people like soda, smoking, drinking, and eating tasty things.

In the public health world, if a dollar's worth of effort yields greater expected DALY benefits in dietary and lifestyle regulation than it does in pandemic avoidance, that dollar should go to dietary and lifestyle regulation. In the economics world, we start by looking for market failures and target funding where markets won't do well on their own. And when it comes to lifestyle regulation, we need a rather harder look at things than just DALYs where choosing agents might well prefer to consume unhealthy things, at DALY cost, in exchange for current consumption benefits.

If we had to rank-order things by a very rough guess as to where the market failures are worst, I'd rank them as follows:

1. Pandemic readiness and response, especially in developing countries;
2. Antibiotic resistance and superbug mutation;
3. Development of new antibiotics;
4. Contagious diseases affecting developing countries where there's no particular profit in pharmaceutical investment: malaria and a big pile of others;
5. Other contagious disease investigation and response;
6. Vaccination promotion;
7. Poor information about risks of smoking, diet and alcohol in the third world

The first one is at the top of my list not on expected value terms but as insurance. Like global warming, bad pandemic outcomes have the potential - low probability but potential - to destroy civilisation. It's then worth making investments in those kinds of areas not just on expected value calculations but also on an insurance argument - like Weitzman's argument on global warming. I also think governments should be investing more in asteroid detection and response, on exactly the same kind of argument.  

Pandemic readiness provides a strong nonrivalrous benefit to everyone. Third world countries generally do not have anyone with a sufficient encompassing interest in their prevention to ensure that the job gets done, so other mechanisms are needed, whether multigovernmental investment through the WHO or philanthropic investment by individuals. Note that there are exceptions, when you have enough Foreign Direct Investment. 

Antibiotic resistance flows directly from the negative externality imposed when someone over-uses antibiotics or uses them improperly. Development of new antibiotics has little profit potential where they're sensibly restricted to very hard cases and where governments and insurers would refuse to pay the per-dose amount that would then be needed to cover development costs. Similarly, there is little expected profit in developing cures for diseases that mostly affect very poor people and where patent protection is unlikely to be enforced. In all of these cases, prizes seem the most obvious solution for new drug development, where the funds would be provided both by governments and by philanthropists. 

Other contagious diseases and vaccination are lower on the list. Every one of us has an interest in protecting our own health. But because others bear direct contagion costs of our personal underinvestment in efforts against contagious disease, we will have less vaccination than would be optimal and less control against contagious disease. Subsidising the development and deployment of vaccines is then worthwhile. I can even see reasonable arguments for making vaccination mandatory.

Down at the bottom of the list is information-provision on lifestyle issues. There are plausible market failures around people being poorly informed about the health and addiction risks of tobacco and alcohol, and about the health risks of unbalanced diets. But a lot of observed behaviour would simply drop out of expected low life expectancies in developing countries and lower incomes, both of which increase the expected willingness to bear risk in exchange either for income or for pleasure. People doing unhealthy things isn't itself necessarily evidence of irrationality, or bad information. 

So that's how at least this economist would rank things. But if we ranked them by "where does a $1 do the most to improve DALYs", we could get an entirely different outcome. It would be like an electrical engineer ranking metals by conductivity and then proposing that we use silver for our main electrical transmission lines. Sure, it's more conductive, but it also costs more. Conductivity isn't the best outcome measure. Neither are DALYs where some of the potential policies impose costs on consumers that are not measured or weighted or considered by the public health side. 

In the public health world, tobacco is one of the very most important things to be worried about because it ranks very highly in the DALY-reduction rankings. Tobacco is not contagious, does not have existential risk to civilisation, and in some but not all cases results from informed decisions to enjoy nicotine at the expense of health and life-expectancy. The external costs imposed by a smoker are very low relative to the external costs imposed by somebody with contagious disease. Similarly, eating a diet with too much salt mainly hurts the person choosing to eat the diet with too much salt. There could be some case for providing information to remedy any market failure based on people not knowing the full health costs of eating too much salt, but that's about it. 

There are very real and substantial market failures in public health that are underweighted where public health advocates take a DALY-based approach rather than starting with market failures. If we look at priorities by budgetary allocations, it's great to see the focus on polio eradication, and the other work on tuberculosis, malaria, and AIDS; the first two have strong market failure arguments justifying them. AIDS receives a lot of private funding in the developed world, but there are reasonable arguments for providing funding there in the developing world. But increasing funding allocations to lifestyle issues and to tobacco control? It's harder to find a market failure case there.

I'm not building a straw-man here. They take "minimise burden of disease" as objective function, where every potential health cost matters equally, with no weighing of offsetting consumption benefits that come from alcohol or salty foods as compared to Ebola.

@EricCrampton That ratio is about right. The priorities (roughly) reflect the burden of disease.
— George Darroch (@mrdarroch) October 5, 2014

It worries me that journalists cannot find an after-hours WHO spokesperson on Ebola when a Spanish nurse contracts it in a Spanish hospital, that WHO officials cite being overstretched as reason for their not being able to respond as effectively to a pandemic, and that the WHO is at the very same time putting resources into e-cigarette regulation. There are opportunity costs to spending $122 million on the line item including alcohol, tobacco, drugs, and unhealthy diets.

This isn't just a "get off my lawn and leave me alone" thing. It's "why are you spending a hundred million bucks protecting people against themselves when you're under-resourced for pandemics?!?" thing.

Shouldn't we first target the health priorities that stem from market failures and impose existential risk?

Update: I've had request for clarification of what market failure means. My encyclopaedia entry is here. Further discussion here.


* Or at least there wouldn't be costs to getting the polio vaccine if the CIA hadn't managed to convince everybody that vaccinations are spy mission.

Moderate drinking and health

My best read of the evidence is that moderate drinking reduces mortality risk. Most work finds a J-curve relationship: the relative mortality risk of drinking decreases for light to moderate drinking, becomes comparable to teetotalling somewhere around 30-40 grams of alcohol per day, then continues increasing. The curve looks a bit like the letter J, though it never gets quite as vertical as the letter.

There are, of course, lots of studies out there, of varying quality, and they don't always agree.

And, worse, there are some nasty potential confounds out there. One obvious one, which folks dismissive of the J-curve relationship tend to promote, is that many studies confound never-drinkers with ex-drinkers. If someone quits drinking because he's destroyed his liver, it would be a mistake to class him as a non-drinker to evaluate the health effects of moderate drinking. Other potential confounds include omitted variable bias: if moderate drinkers also tend to have better health behaviours than heavy drinkers or non-drinkers, then the relationship could be due to the other health behaviours rather than due to the alcohol.

The best way forward is a decent meta-study that pools results from various studies and assigns them weight according to how well the study was conducted, or takes averages across different sets of studies that control differently for various effects.

The best one of these I've seen is Castelnuovo and Donati's 2006 paper from Archives of Internal Medicine. They strongly endorse the J-curve relationship. They pool 34 studies of a total of more than a million individuals. Some of these studies include former drinkers with abstainers; others carefully separate them out. But both types of studies find a J-curve. Including former drinkers as never drinkers biases things, but not enough to overturn the result: the studies that are more careful still show a strong J-curve relationship, just with the curve cutting the x-axis around 30 grams per day rather than around 60 grams per day.

Castelnuovo and Donati note the problem of omitted variable bias, but suggest it's likely to be pretty limited. They note that the health behaviour covariates included in those studies adjusting for those covariates only have small effect on the overall curve: the unadjusted figures show a maximum risk reduction of 19% while the adjusted figures knock that back to 16%. There will of course be other health behaviours correlated both with drinking and with mortality outcomes, but they would have to have more than five times the effect of the observable health covariates to flatten the J-curve to a hockey stick. That's rather implausible. Note of course I mean a proper hockey stick held with the shaft horizontal - not one of those silly Kiwi lawn game sticks.

In the economics of discrimination literature, we can pretty readily believe that the 5% or so remaining difference between blacks and whites in wage regressions is largely due to unobserved variables that correlate both with wages and with race. If observable characteristics correlated with race and wages knock back the wage gap from 20% to 5%, then it's pretty plausible that unobservables might have a quarter the effect of the observables. But having five times the effect of the observables? Nah.

And so I was pretty surprised to find that the New Zealand Drug Foundation considers the J-curve a "myth". Why do they think it's a myth? Non-randomised trials suffer from omitted variable bias and often conflate never-drinkers with former drinkers (egads, asked and answered!). What do they cite?

• Chikritzhs et al 2009, the upshot of which seems to be "oh, empirical work based on surveys is hard, so we really can't say anything that might encourage people to drink". For what it's worth, Chikritzhs also spends a fair bit of time investigating the evils of the alcohol industry and pushing for new and higher alcohol taxes;
• Connor et al in the NZMJ. This is a fun one. They say alcohol's responsible for 1037 deaths but helps prevent 981 deaths, for a net loss of 56 lives in 2000. They also specifically tally more than 4000 life years gained due to reductions in ischaemic heart disease associated with alcohol consumption. Hardly a great source if you want to claim that there's no benefits of moderate alcohol consumption! I wish they'd listed which claims they wished to back up with Connor et al's piece. Connor specifically says that there are health benefits from regular moderate drinking for those middle-aged and older;
• Mukami et al on beliefs about moderate drinking
• Rimm and Mukami 2008, the upshot of which is that since moderate alcohol consumption increases some disease risks while decreasing others, we might want to be careful in recommending moderate consumption to folks with a very strong susceptibility to the disorders that alcohol exacerbates (we'd presumably then also want to more strongly recommend it to folks with susceptibility to disorders attenuated by moderate alcohol use);
• Doug Sellman (et al)'s 2009 "Viewpoint" piece in the NZMJ that alcohol cardioprotection has been talked up (never mind that Corrao 2000 definitely finds a J-curve in cardioprotection for both high and low quality studies, and that Rimm and Moats 2007 are trenchant about recent efforts to downplay the existence of the J-curve)

So they're relying on some op-eds and nebulous worries about the quality of existing studies rather than the best consensus estimate of the literature.

Of course, they're not the only ones. The WHO also spends a bit of time trying to talk down the cardioprotective effects of alcohol. I've noted before the WHO's ongoing war against alcohol, so it's little surprise they play a bit loose with the literature.

WHO briefly notes Corrao et al, blustering on about confounding where non-drinkers are lumped in with former drinkers, but Corrao specifically checks for that and finds that the J-curve on coronary heart disease doesn’t go away when you have studies that split out former and never drinkers. And, they get Corrao simply wrong on another dimension: they cite it as a meta-study of 28 cohort studies: Corrao based its main findings on 28 high quality studies but also presented findings from the 51 overall studies they’d selected: the selected studies showed a smaller J-curve effect than the 51, so they weren’t picking the 28 to get a larger J-curve.

It instead looks like WHO was trying to downplay Corrao relative to Fillmore, making it seem as though the gap in number of studies covered was much larger than in actuality. Corrao is listed as a meta-analysis of 28 while Fillmore is "a recent meta-analysis of 54". Fillmore disagrees with Corrao but Fillmore’s results seem to hinge on the two studies they view as being error-free; Corrao’s results just seem more robust. And, Rimm and Moats (2007, linked above) nicely show Fillmore’s results to be outside of the norm.

While WHO doesn’t bother noting Castelnuovo’s extensive meta-study on overall mortality it cites Jackson’s op-ed in the Lancet, almost every objection in which is answered in Castelnuovo. And, the WHO doesn't even note that their footnote here points to a two-page Lancet op-ed (it's in the "Comment" section) rather than to an empirical study. The WHO paper just isn’t good science. It's motivated reasoning.

The Drug Foundation thus far stands by its Mythbusting article. That's disappointing. If the goal is healthism, the best evidence suggests that a bit less a drink a day has the greatest mortality risk reduction, that there are still health benefits (relative to teetotalling) up to about three or four drinks per day, and that folks ought to be cautious about adverse health effects beyond that. They might also note that folks with family history of cancer drink a bit less while those with family history of heart disease drink a bit more. The economist would then say to weigh the health costs of drinking more than the health-maximizing amount against the consumption benefits.

I'm a bit puzzled why the anti-alcohol folks would want to bury the evidence of a J-curve - I have a very hard time seeing how a truth-seeker could find other than that there's a J-curve on the balance of the evidence. Is it the noble lie: that folks who've heard of the J-curve would use it to rationalize far greater drinking, so it's best to pretend it doesn't exist?

WHO's war on alcohol

Cresswell points to this from the New Scientist.

Sally Casswell of Massey University in Auckland, New Zealand, who helped produce the WHO document, says a focus on passive drinking is key to winning public acceptance for more stringent alcohol legislation. "It challenges the neoliberal ideology which promotes the drinker's freedom to choose his or her own behaviour," she says.

Persuading governments and citizens of the problem is just the first step, though. What, if anything, can be done to stop people drinking to excess?
...
Anderson is still optimistic, though. "I don't think alcohol will ever become as socially unacceptable as tobacco use, but societies may adopt a more cautious approach to its supply and marketing, resulting in less harm."

Folks advocating using WHO methods on alcohol ought to know that the WHO is far from a neutral impartial agency. The Casswell quote is telling. They need to challenge the ideology that individuals can choose their own behaviours. If you click through to the WHO's draft document, you find

• At page 6 they list raising global awareness of the magnitude of public health problems as the first objective in their 5 point plan -- that's the Single, Easton, Collins, Lapsley et al cost only method for producing an inflated estimate of the social costs of alcohol: highly productive as agitprop, totally useless for rational policy


• Their guiding principles include (p.7)
  • Public policies and interventions to prevent and reduce alcohol-related harm should be based on clear public health goals, and be formulated by public health entities [ie based on healthism with no consideration of benefits of drinking for moderate drinkers]
  • A precautionary approach that gives priority to public health should be applied in the face of uncertainty or competing interests. [more healthism]
• Recommendation for "public health-oriented government monopoly of retail sales"
• Regulating days and hours of retail sales [days?!]
• regulating modes of retail sales of alcohol (e.g. on credit) [They don't want you to be able to use your credit card at the bar]
• partial or full ban on sales and consumption, according to cultural norms [ie if you can get away with it, implement prohibition. In the meantime, produce enough shonky cost-only reports to sway public opinion towards prohibition]
• addressing informal or illicit production, sale and distribution of alcohol [so no more home brewing to get around their regs]
• Advice for member states on getting around world trade treaties in order to facilitate prohibition at home (or at least that's the most plausible reading of this one

  WHO can contribute support to Member States by: facilitating regional and global efforts to examine and, if needed, mitigate the impact that provisions for free movement of goods and services as well as increased travel might have on harmful use of alcohol and which can support and strengthen governments’ ability to regulate the availability of alcohol at the national level; developing and sharing expertise in constructing and operating effective national systems of controlling the alcohol
  market.

• restricting or banning direct or indirect marketing of alcohol in certain or all media, same for sponsorship activities
• regulating new forms of marketing [can a brewery have a website?]

And that's just the first 16 pages of a 27 page document.

The WHO is pushing a neoprohibitionist agenda. When the healthists in your country say that they're only following the sound recommendations of the impartial WHO, watch out.

Update: Velvet Glove comments, as does Dick Puddlecote