Me On Marketplace

I’m on today’s edition of the NPR radio show Marketplace Money (transcript; audio ~25:30 to 29:00):

The average dog owner spends $655 a year on health care, that’s up 50 percent from a decade ago. Cat owners are in for $644, up nearly 75 percent, close to how much our health care costs have risen by. And that’s a puzzle to economists, like Robin Hanson at George Mason University.

Robin Hanson: Everyone’s got a favorite villain or bugaboo about why human health care costs are increasing; it’s too much regulation, too much government involvement, too much third-party payment.

Too many malpractice lawsuits. None of these factors apply to pets. You can’t blame insurers for pushing up costs either. Pet insurance is rare; only 1 percent of pet owners in this country have it. The 99 percent are paying full freight.

Hanson: But in pet medicine, people put their money on the barrel head. And yet pet expenses are increasing nearly as fast as human expenses.

What gives? Hanson and other economists give two explanations. Explanation one: Love. We treat our pets like family. They eat our food, they sleep in our beds, they relax at the spa, they have Facebook accounts. Of course we’re going to pay for their health care. Take dogs.

Hanson: So we want to show loyalty to these dogs who are showing loyalty to us. One way to do that is to spend more on medicine for them.

Explanation two for the rising cost has nothing to do with your pets; it’s how we see ourselves.

Hanson: We compare ourselves to people around us. And we ask the doctor and they say well, lots of people do this, most people do this, and the bar has been raised on how much you need to spend on your pets to show you’re a caring pet owner.

In the interview I tried to pose the choice as supply vs. demand explanations, as I’ve done in my last two posts, but I guess they didn’t find as engaging.

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    Another relevant one that applies to both is the growth in options. There are many, many, many treatments that are avaliable now that were not, 10 or 20 years ago.

    Effectively when people buy medicine they aren’t buying a single product but buying from a host of new products and new ones get added all the time. This means that the entire medical sector of the economy is expanding but any specific item isn’t getting more expensive?

    A way to test this would be to look at prices for the same procedure over time versus prices for generic insurance over that same time.

  • I wonder what is happening with pet healthcare spending in Canada. (tongue in cheek)Maybe it will pass human health care in spending.

  • In the interview I tried to pose the choice as supply vs. demand explanations, as I’ve done in my last two posts, but I guess they didn’t find as engaging.

    The dog/cat comparison isn’t clearly attributable to differences in demand. Why has the cost of treating cats caught up with the cost of treating dogs? Demand-side thinking predicts more would be spent on dogs, who are loyal and have a sense of belonging, which we reciprocate? There would actually seem to me a more persuasive supply-side explanation: veterinary medicine has made diagnostic improvements that allow diseases in cats, who are harder to diagnose because of their less-demonstrative natures.

  • George Weinberg

    I’m not convinced the fact that health care costs are increasing at roughly the same rates for humans and pets should be considered anything but a coincidence. I suspect the breakdown of “health care” costs for humans and dogs is very different. How much is spent on life extension for clearly terminal dogs? Does anyone even try to “save” premature puppies, or puppies with severe birth defects? I’d guess most health care costs for pets are either routine maintence costs or procedures thatn really will allow pets to live a fairly long and healthy life.

    If human and animal health care is an “apples to oranges” comparison, which I think it is, then any reasoning about the causes of human health care cost increases based on similar rates of increase for pets is bogus.

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