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Regulatory Differences

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Regulatory Differences

Robin Hanson
Jan 3, 2012
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Regulatory Differences

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I recently discussed a puzzling regulatory difference: our applying work hour limits less to high than low status jobs. Many took me to be advocating fewer limits for low status jobs, and were eager to point out good reasons for work hour limits. But our not having a good reason for putting more work hour limits on high vs. low status jobs can equally well support adding more limits to high status jobs, rather than fewer limits on low status jobs.

John Cochrane similarly discussed a puzzling regulatory difference:

Ken Rogoff put in this little zinger

Medical care … fails to satisfy several of the basic requirements necessary for the price mechanism to produce economic efficiency, beginning with the difficulty that consumers have in assessing the quality of their treatment.

… really, Et tu Ken? It’s hard to know if the car mechanic is doing a good job. Get ready for the Federal takeover of the car industry. I can’t tell B grade exterior from A grade interior plywood, so we need a Federal takeover of home rehab.

Many readers probably take this as an argument for less medical regulation, and are eager to argue for or against that position. But pointing out that we have a similar difficulty assessing car mechanic and doctor quality can equally well argue for regulating car mechanics more, instead of regulating doctors less.

In general, people seem far more eager to collect respectable arguments for or against various specific regulations, than to consider the coherence of a pattern of regulations they endorse. They are satisfied to offer arguments for why janitors should have work hour limits, why musicians should not, why doctors should be highly regulated, and why car mechanics should not, all without much noticing or caring how much they treat similar cases differently.

This suggests that there is a lot of rationalization going on. That is, rather than choosing some principles and then consistently applying them, people instead pick various random policy positions and then search for justifications. There seems to be only weak pressures to even notice much less reduce how they and their arguments treat similar things differently.

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Regulatory Differences

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Overcoming Bias Commenter
May 15

"I think there should be a gov't agency in charge of reviewing each person's budget, lifestyle, medical condition, etc, and choosing what food that person should be allowed/required to consume." What would happen to our brains if the government started thinking for us? What would happen to the government if what would happen to our brains if the government started thinking for us, happened? What would happen to us, if what would happen to the government if what would happen to our brains if the government started thinking for us, happened, happened? Did you happen to think about these things before typing "- overall I'm sure we'd be much happier!"?

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Overcoming Bias Commenter
May 15

How about 15%? Is that enough to count as “much”?

The right way to think of it is that Blue Shield collects not two cents on the dollar but fifteen cents--and then sets thirteen of those fifteen cents on fire.Of course, that is only what the insurance company spends, by using excess paperwork to ration care they also increase the expenses that health care providers have to shuffle that paperwork around. What are the costs by the health care providers? Are they less? Kind of hard to figure out how they could be. The health care providers have to generate the paperwork they submit, the insurance company only needs to look at the bits of paper. If it is $0.13, then the total non-health care cost is 28%, more than a quarter of what is spent on health care.

Does 28% count as “much”?

There are some good comments at The Washington Post on how a 15% fee for administering a zero-sum fund is very expensive. That is what health insurance is, administering a zero-sum fund. Health Insurance companies take in premiums, pay out for health care and keep the difference. For that they need 15% in fees and profits?

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