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    Maxine's Essays

    • 21st Century Regress
      Sometimes it seems like the world is going to hell and there's absolutely nothing a girl economist can do about it.
    • What Exactly Are We Crowding Out?
      The current economic downturn isn't a random draw of a black ball from an urn containing white balls and black balls. There's no sampling distribution. Very specific policies and actions landed us here. Now we must decide not only what policies need to be put in place to prevent it happening again, but also what policies would best drive us out of the ditch faster and sustainably.
    • I Wish It Were Only Butter
      We should be giving up some butter if we must. We should not give up education or health investment (or infrastructure or the environment (hello, BP). They may be the only legacies of any value that we pass on to our children and grandchildren.
    • Rational Health Investment?
      The obvious "market solution" is to improve the long run return on investments in health among the disadvantaged through meaningful and effective publicly funded education. The obvious short run "market solution" is to reduce the costs of investment and the shadow price of health for the disadvantaged by providing health insurance cover and reduced out-of-pocket costs.
    • The Socrates Parameter
      To the extent that our limbic systems respond to such engineering by over-riding the judgment of our frontal lobe and to the extent that our frontal lobe is deprived of the information it requires to make a rationally self-interested judgment, we are not only pigs and fools, we are slaves.
    • The Economic Rewards of Virtue
      If individual virtue tempers our "piggy" desires and conditions our choices to something that is both individually and socially better, then the economic rewards of virtue as embodied in and promoted by societal norms and institutions are far greater than we have ever suspected. As economists, we would do well to recognize this when we teach U max.
    • The Market for Morals
      Markets then are places where more is exchanged than goods and services, labor and product, credit, and interest. They are places where we also develop the personal virtues of temperance and prudence and the social virtues of benevolence and justice. When they function well, they produce trust, loyalty, and sympathy among those who trade there.
    • Post-Modern Applied Economics: It’s the Error Term, Stupid
      Maxine believes it’s time to refocus attention and discussion on the error term. It is often where much of the action is in our models. It is where unexpectedly catastrophic events dwell resulting in fat tails. It is where our animal spirits manifest and cause us to do the right thing or the wrong thing or the thing everyone else is doing rather than the self-interested, fully-informed rational thing. It is where God and miracles and chance dwell.
    • Intergenerational Win-Win: Health Insurance, Education, Environment, Infrastructure
      So when we’re talking about fiscal stimulus packages and we’re borrowing from our grandchildren to finance them, we should be thinking about how to use stimulus monies to create value for those grandchildren AND stimulate our economy.
    • Short-term Private Payoffs, Long-term Social Costs
      The real health reform discussion, the one we should be having, is “What must we do to create a health system that is both efficient and fair?” The answer will almost certainly include relegating the private sector to markets where market forces or regulation are effective at aligning short-term private incentives and goals with long-term societal interests. If such markets are scarce or non-existent in health, then the private health sector will be of limited value.
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    When resources have to be shared,

    Just a question: about wich resources do you (would we) talk about?


    All resources that produce health, at least in my 2 child, benevolent parent example. Obviously, it gets MUCH more complicated at the societal level. Think of this as a framework for conceptualizing the problem, ALOA.

    "spends more per capita on health as a percent of national output"

    This is surprising. I'd think that for a country with a much smaller economy, say Luxemburg, the ratio of (per capita spending on X) / GDP would be much higher, where X is pretty much anything, even "defense"; similarly for any other measure of output you can think of.

    Thanks for catching this, Marcel. There was a missing "and". It should have read as it now does (and I believe is now correct). :-)

    All resources that produce health

    Hm. Let us exclude something. We have enough humans without work. We have enough raw materials and energy.

    What resources do we have to share to produce health?


    If quantity of health is anything related to measures like life expectancy, then the assumption that the sicker person also has lower d(health)/d(inputs) seems counter-factual, at least at a relatively low level of resources. The greatest gains in life expectancy usually come from relatively cheap means of addressing the needs of the frail. Vaccines and antibiotics disproportionally help those with weaker immune systems, simple prevention greatly helps people prone to high blood pressure or diabetes, early treatment of tooth decay has far-reaching health benefits, etc.

    So a more interesting model has person B with higher d(health)/d(inputs) at lower levels of inputs, but perhaps person A with a less negative d2(health)/d(inputs)2. That would seem to result in a more egalitarian allocation of resources for a lower total level of health spending, but an increasingly inequitable allocation as the level of spending increases. And that's pretty much what we see in your last chart.

    "Hm. Let us exclude something. We have enough humans without work. We have enough raw materials and energy.

    What resources do we have to share to produce health?"


    Forgive me if I misunderstand, but if you are asking what kinds of limited resources (i.e. those that must be shared) are involved in producing health, consider the following:

    Education, nutrition, proper housing, safe neighbourhoods, and leisure time.

    Those are some factors that, when present in an individual's life, could correlate with better health.

    You might also consider physician hours (easier to see a doctor in a wealthy neighbourhood), or medical supplies (said clinic in a wealthy neighbourhood is well-stocked).

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