Wednesday 28 October 2009


Robin Hanson notes that Labour's argument on ACC privatization generalizes:
Years ago as a health policy postdoc at UC Berkeley, I was stunned to hear a famous health economist explain it was good that the government did not disclose the med outcome data it made hospitals collect – the public might “misinterpret” outcomes, you see, not correcting right for differing patient mixes. He didn’t think it relevant that the same argument suggests Consumer Reports not publish car reliability stats, since they do not correct for driver differences.

Eric Crampton notices a similar mistake:
I’ve about a half dozen times heard … spokespersons … arguing that allowing private competitors into …. the New Zealand Accident Compensation Commission, is bad because private firms have to earn profits and so they’ll have to have higher cost structures than the public insurer. But no National Radio interviewer provided the obvious retort: If the argument were true, we’d want the government to be running everything!
The core problem seems to be that folks who intuitively feel that area A deserves special treatment T look for a justification, and then stop when they find a feature F of area A that suggests treatment T might be a good idea. But by stopping there, they do not consider why this argument does not also justify the same special treatment T of areas B, C, D, etc. that also have feature F. This is an extremely common error, even among folks very skilled at analyzing math models of feature F.

To justify their intuitions that medicine should be treated specially, people often refer to features like sometime large decision consequences, sometimes large prices, suppliers knowing more than customers about product quality, customer behavior influencing customer outcomes, etc. But such folks usually do not favor giving other areas that share these same features the same special treatments.
I wonder if the "even among" may be more "especially among". Gotta occasionally look up from the blackboard and peer out the window....

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