Helping professions

Robin Hanson argues that ‘helping professions’ like medicine don’t really help more. Part of his argument goes as follow:

1. You charge a price for your services, so the help they receive is the difference between the value they gain and the price you charge.  The more you charge the less help is gained, and doctors charge a lot.

2. If there are a fixed number of slots in medical school, you would just displace someone else.   You then have to ask how much better are your services than that person’s.  And beware of overconfidence. 

3. If there are not a fixed number of slots, then by becoming a doctor you induce between zero and one more doctor’s worth of patients to be treated.   But these are marginal, not average, cases; these patients thought their case so mild that they were right on the borderline of not going to a doctor at all.   So you only get to take credit for the value these marginal patients get, not the average patient.

I find this somewhat convincing, though it also applies in reverse: if you’re worried that your decision to join the mafia might make the world a worse place, you may be overstating the negative impact.

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13 Responses to Helping professions

  1. Verdurous says:

    I think for the most part she is correct. Medical relationships are more than ever commercial in nature. However, the assertion that doctors charge a lot is not a fair one, although some specialties are certainly very expensive.

    For the past two or three months I have visited a man dying of a brain tumour. I would spend maybe 30 minutes each time on average and sat with the family afterwards for some time. Travel to their house took about 10 minutes each way. The family had my mobile phone number and called me at home sometimes, occasionally on weekends.

    On the day he died I stayed longer and shared a cup of tea and some reminiscing. Each visited earned my practice around $58 dollars out of which somes practice costs which are typically of the order of %30-40 for most practices. I am an employee so I get paid an hourly wage.

    This fellow died at home and had the benefits of excellent palliative care services and medication. I attended his funeral and was privileged to see a brave family cope with tragic loss.

    Many GP’s would have done exactly the same. Am I replacable? – of course. Aren’t we all? Did I get rich from the experience. Yep sure. But not in monetary terms.

    Charity is a great thing. But can you run an industry on it? If society doesn’t value caring relationships as I believe is increasingly the case (particularly non-commercial caring relationships) then no wonder everyone wants out. ie. nurses, aged care facility workers etc.

    Had a plumber come and fix your hot water system lately? What did he charge?

  2. Robin Hanson says:

    Yes, the reverse argument does apply. Professions with negative externalities are worse than ones with positive externalities, so most professions are better than the Mafia for that reason. But it is not clear medicine has positive externalities beyond that of most professions.

  3. Yobbo says:

    “so most professions are better than the Mafia for that reason.”

    Not most I wouldn’t think. Any government job is no better than the Mafia because they are essentially the same thing – if you don’t want their services and refuse to pay for them, they will use violence against you.

    In the Mafia’s case they might beat you up or break the windows of your restaurant. The government will send armed men to your house and cart you off to jail for tax evasion.

    At least doctors don’t beat you up or throw you in jail if you miss your checkup.

    The big problem nowadays though, especially with GPs, is that most of their work is writing out prescriptions, and for anyone who already knows what they need it’s a needless waste of $50 and Doctor’s time that could be better spent helping someone who needs it.

  4. Though medicine is seen by its practitioners and patients in this way because of its personal nature. Ditto teaching (where if you are bright, you are making a financial sacrifice to do it you won’t with medical practice). There are several teachers and at least one doctor to whom I feel a great sense of gratitude, even though they were being paid to do their jobs and there are thousands of others in the great anonymous market whose work also made or makes a significant positive contribution to my life.

  5. derrida derider says:

    I’ll let your right wing anarchist rant go through to the keper, yobbo. But that last sentence shows you don’t understand the GP business – there’s a big internal cross subsidy between the 5 minute consults you describe and the one hour ones that are necessary for proper diagnosis and/or counselling. GPs couldn’t do the latter without the former.

    In a developed society health care is always going to cost a bomb, however it’s financed and arranged. Having a highly trained person sit with you for an hour is always going to be expensive. Getting someone to hook you up to technologically sophisticated machines and maintain you on them is always going to be expensive. Developing safe and effective drugs is always going to be expensive.

    That said, I reckon there are big inefficiencies we can fix. For instance, granting specialists control of entry to their speciality is just asking for them to extract monopoly rents. Allowing drug companies to lobby doctors is always going to result in more expensive (and probably less efficacious) prescriptions. Financing drug development by granting patent monopolies ensures development goes towards long-term palliatives rather than prevention or cure, and for the diseases of the rich rather than the poor. Etc, etc.

  6. Verdurous says:

    Correction.

    “Each visit earned my practice around $58”

    Should read “Each visit earned my practice $83.40”

  7. Andrew Whitby says:

    1. Doctors provide high-value services (by saving lives). It would have to be a pretty major plumbing disaster before I was willing to pay the same for plumber as I would for a doctor. Therefore if we accept that the “help” is the difference between price and valuation (the consumer surplus), the help provided by doctors is sometimes very large.

    2. & 3. I’m not sure that these are real arguments. It’s basically invoking the “what difference does one person make” argument (and since, we’re in this forum, the “my vote won’t swing it, so why bother” argument). It might be a valid technical point, but it’s no philophopy of life (dammit, I joined the mafia to make a difference!)

    And additionally, maybe we see doctors as helping exactly because (as DD noted) they do cross subsidise, thus encouraging equity. Oddly we don’t seem to view insurance companies this way…

  8. Verdurous says:

    Interesting points Andrew

    There may be a logical fallacy at play here akin to:

    What would happen if I didn’t vote in the last election – no difference, therefore individuals do not make a difference. Therefore don’t vote.

  9. Yobbo says:

    Well there would have been a difference – you would have got a fine.

    DD – I still don’t see the logic in keeping prescriptions in the hands of GPs. At the very least pharmacists should be able to issue them too.

    Every time I have visited the doctor in the last 10 years it has been to get a prescription which I have asked for by name. Especially now with the internet and google it’s entirely possible to treat non-serious illnesses without any help from a qualified doctor.

    Forcing people to see a GP to get prescription drugs is just protectionism for a class of workers who so don’t need it.

  10. Russell says:

    Lord economists are mercenary – what a vulgar profession. This Robin Hanson assumes that people place the same value on price/money as s/he does: “the help they receive is the difference between the value they gain and the price you charge”.

    I haven’t got a clue what doctors charge, nor do I care. The ‘price’ of seeing a doctor is no part of the transaction that I’m aware of. My very rare visit to a doctor is to benefit from his knowledge – I’m only concerned with the problem I might have, and what he says about it. The only benefit I’m hoping for is peace of mind.

    Advice to Yobbo: if you’re so sure it’s a “non-serious illness” don’t go to a doctor – whatever it is will clear up anyway and you won’t have drained the Medicare and the PBS with your trivial complaints.

  11. Patrick says:

    Thank god for economists – if anyone helps us understand how to make ourselves and others meaningfully better off, it is (supply side) economists and econometricians.

  12. 1. Doctors provide high-value services (by saving lives). It would have to be a pretty major plumbing disaster before I was willing to pay the same for plumber as I would for a doctor.

    It’s along time since you could get a plumber to make a home visit for $83.40.

  13. Thomas Brinsmead says:

    The same argument applies to every market transaction. At the equilibrium optimal market conditions with convex production and utility functions, all relevant margins are zero, so the last (marginal) action is “irrelevant”.

    At equilibrium, the net marginal utility of consumption less expenditure is zero – so the last “unit” of consumption is irrelevant.

    At equilibrium, the net marginal profit of increased investment is zero – so the last “unit” of investment is irrelevant.

    At equilibrium, the net marginal benefits of increased leisure time is zero – so the last “unit” of leisure is irrelevant. (See also Verduous’ comment above on voting).

    This can be used to “prove” the merit almost any policy you want – simply assume that all the desirable first order consequences of the proposed policy have a net impact which is, in fact, the intuitively desirable one, then use market equilibrium arguments to demonstrate that all the intuitively undesirable first order consequences are actually zero at the margin.

    This seems somewhat akin to Zeno’s paradox, however, even though EACH unit of consumption (investment, leisure time, vote) can be considered the “last one” and of negligible marginal impact, it is not true that together they ALL have zero impact.

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