The most important economics paper this year

I’m a little late to point this out but this paper is the most important economics paper of the year. It uses a randomised experiment in Oregon (and kudos to the state of Oregon to being farsighted enough to provide both it and the data) to measure the impact of providing health insurance to low income households. The study was conducted with scientific transparency never before seen in economics or, possibly, social science — right down to committing to regressions the research team would run prior to receiving the data.

The measured effects are huge — most notably on happiness. On one reading it is as clear a case for social insurance as any empirical case has been made for, say, early childhood development. Here is a discussion by Ray Fisman.

12 thoughts on “The most important economics paper this year”

  1. It’s just what you’d expect from the revealed preferences of voters in most developed countires – as I often say about welfare state institutions generally, if they weren’t contributing to the median voter’s wellbeing they’d have been done away with long ago.

    And of course there is the simple cross-country comparison of “bang for buck” in health outcomes that consistently indicates socialised medicine is more efficient than fully privatised approaches (results that are therefore consistently ignored by market-loving economists and the vested interests they support). The asymmetric information problems in health make unregulated health systems a very bad bargain for most people.


  2. the effects on happiness and health are too big. We are not looking at the impact here of health insurance, but the impact of winning something desirable versus not winning something desirable.


  3. Let me get this straight. People who get health insurance use it and are therefore happier and healthier than those who do not have health insurance?

    Good job, science, groundbreaking.


  4. No, Hello, people who get good free health insurance are **much** happier and healthier. So much so that it dwarfs any reasonable estimate of the loss of happiness to others caused by them paying either taxes or compulsory and heavily cross-subsidised premiums to fund it.

    That ain’t a priori obvious at all. But it is what you’d conclude ex post after you look at health care systems around the world – which was my point above.


  5. No need for experiments, we’ve got one going in Canada. When you are told you have a cancerous lump and the operation waiting list is 6 months, what do you do? Either slowly start crawling towards the graveyard or take a loan/sell your house, etc. and go to the States to get treatment. You can imagine the level of happiness knowing that you have cancer and waiting for 6 month. (this is a real example, not a hypothetical one). I can probably write a paper that long filled with personal, friends and relatives examples.

    I won’t go into the long waiting times, incompetence and total indifference of doctors (they are government workers, protected by so many laws that they can do pretty much all they want)

    Remember boys and girls – you pay for free health care with your health.


  6. Of course having health care (in this case free since these people can’t pay for it) will make one happier. That does not take a scientific study to tell you that. However, it also does not take a scientific study to tell you that there are tradeoffs to everything. Want to give free or low cost health care to everyone? Well, expect longer waits and deterioration in service. Just take a look at Canada where the waiting list for breast cancer treatment is 6 months (lovely if you are diagnosed with that), or in Britain where men with prostate cancer must live with this painful disease for years before being treated.

    When looking at the overall population – the upper middle class and higher don’t care because they have the money to get the health care treatment they need when they need it. The poor and lower middle class love it because they had no insurance before (note no insurance not no health care). As usual, the middle class gets reamed because they don’t have the money to escape the system that is created by the desire to make everyone happy..


  7. >> And of course there is the simple cross-country comparison of “bang for buck” in health outcomes that consistently indicates socialised medicine is more efficient than fully privatised approaches (results that are therefore consistently ignored by market-loving economists and the vested interests they support)

    You do realize that most countries jigger their numbers when it comes to health care? The US is the ONLY country that routinely adheres to the calculations required by the UN to make this cross tab comparison valid. Also, most of the happiness studies are skewed by the way questions are asked. When it comes to survivability from the 10 most deadly causes of death that are not accidental, the US beats most socialized countries. Next time you need treatment, I suggest you go down to that socialist paradise of Cuba and ask to be treated in one of the hospitals reserved for the locals instead of the tourists. Or maybe go to Britain or Canada and ask to be put on one of their waiting lists.


  8. I just have one question…who pays for this? By the way the corporations that are so mean and hateful are filled with people that have gone to college, and have spent 4 to 6 years of college to become an executive. Too many people want something for nothing. I am sick of people thinking the government owes them something. Get a job, find a trade, learn a craft, get off of the governments tit and do something instead of watch Maury all day on the big screen TV.


  9. To all those dissing the Canadian medical system, I think you are missing the point. Universal health care coverage is what we have in Canada.
    It is not free.
    Canadian’s spend much less on health care than Americans but life expectancy is higher in Canada. However since it is a service provided to all, then money cannot be allowed buy you the instant access you might desire, although we are free to pay for accelerated service if we wish to use private facilities (usually but not always, in another country).

    My question for Americans is “What do you do if you have cancer and you don’t have health insurance?” or you have a prior medical condition when you are applying for insurance and need treatment. Do you get the much vaunted immediate service – no problem? Or do you first sell your car and mortgage your house? If the former then I am puzzled why anyone in the US would bother with paying for insurance and if the latter is correct, then that also is an option open to everyone Canadian or American.

    In other words, the Canadian system is a good universal system that provides good care to the population at large at a reasonable cost. The American system seems to me to be first and foremost about business and the right for mega corporations to make a lot of money off the back of vulnerable people. However, for the lucky and the wealthy, it does provide more responsiveness. So you pays your money and you make your choices.

    BTW I have direct experience of several health care systems (Canada, UK, USA primarily) – they all have their good and bad points but I am happiest with the Canadian so the study results in the article come as no surprize.


  10. Ooh, the schmibertarian pack has arrived – all with the same irrelevant talking point (“there are waiting times for some things in Canada”). It’s amazing how these brave “contrarians” all think alike, isn’t it?
    As for the exceptionally poor value for money represented by US health, Alex, do you really think the consistent gulf in life expectancy, DALY, etc can be explained away by technical decisions about measurement? Remembering, of course, that the US spends about a 30% bigger share of GDP on health than the next most profligate country, despite having a relatively young population.
    And it really is utter bullshit that “most countries jigger their numbers”. In fact, as someone who has in the past been professionally involved in gathering some of my country’s health indicators, that claim is damned offensive. It sounds like the sort of lie that routinely emanates from US “thinktanks” funded by lobbies.


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