Autocracy, Democracy, Risk, & Benefit

Autocracy, Democracy, Risk, & Benefit

How often do you pick up trash along the street when you are out for a walk? If you are like most people, you probably see trash, think that someone should do something about it, and keep on walking. If you were to pick up the trash you and everyone else would benefit, but you alone pay the price of removing the trash. It may be unpleasant to pick up someone else’s water bottle. It may be expensive to pick up a TV along the side of the road and recycle it. Even though these costs are small, they are real and when a single individual pays the costs, the fact that the benefit extends not just to the individual but to other people doesn’t make up for those individual costs. The fact that others will benefit in some ways makes the individual costs harder to go through with.
 
 
The little example of the cost and benefit of picking up trash extends to larger contexts, like disposing of an autocrat. To explain how democracies have helped people become more peaceful in his book The Better Angels of Our Nature, Steven Pinker shows how democracies can overcome the individual cost problem that I demonstrated. Pinker writes, “in a dictatorship, the autocrat and his henchmen have a strong incentive to stay in power, but no individual citizen has an incentive to depose him, because the rebel would assume all the risks of the dictator’s reprisals while the benefits of democracy would flow diffusely to everyone in the country.”
 
 
A transition to democracy, away from an autocracy, can be difficult and violent, but once you get there, society can be much more peaceful. Opposing an autocrat, as Pinker notes is dangerous. Everyone may despise the ruler and believe that things would be better without them, but taking action on their own is difficult. The costs of overthrowing the ruler are potentially life or death, making it hard for any single individual to oppose the autocrat.
 
 
But once you get past an autocrat, once enough people have joined together and once a country has democratized, peace can be more achievable. In a democracy, ousting bad leaders is easier and doesn’t have as many individual costs. The benefits are still there for everyone, but the individual costs have been reduced or eliminated, making peaceful transitions more likely. Violence within democracies comes at a cost to the individual, shifting dramatically from the arrangement in an autocracy. Ultimately, the risk and reward imbalance that individuals face is part of what helps keep autocrats in power, just as it keeps trash along the side of the road.
Diminishing Returns to Incarceration

Diminishing Returns to Incarceration

Prison is often thought of as an important crime deterrent and tool against crime. Prison sentences discourage the bad guys from committing crimes, because they know there is a possible lengthy stay in jail waiting for them if they get caught. Additionally, when individuals are incarcerated they are not out on the streets committing more crimes. The deterrence and lock-up benefits of incarceration are part of what make incarceration such an appealing option for those who wish to be seen as tough on crime in the United States.
 
 
But there also seem to be diminishing returns to incarceration, and at a certain point incarceration can begin to be counter productive and even harmful. Specifically thinking about diminishing returns to incarceration in his book The Better Angels of Our Nature, Steven Pinker writes, “once the most violent individuals have been locked up, imprisoning more of them rapidly reaches a point of diminishing returns.” Each prisoner you lock-up after you have locked up the worst offenders, is marginally less bad. Their crimes, or potential crimes, become marginally less serious, and as a response, the benefit of locking them up is decreased. The crimes they may be deterred from may be less severe to begin with, and the time for which they are incarcerated is doesn’t equate to more serious crimes being avoided, but more marginally less bad crimes being averted.
 
 
Pinker continues, “since people tend to get less violent as they get older, keeping men in prison beyond a certain point does little to reduce crime.” We can boast about how long we lock up the bad guys, but if that term extends beyond the point at which that individual may be a threat to society, then it is fair to ask whether their continued punishment is worthwhile. Perhaps an exceptionally long prison sentence, beyond the point at which an individual is likely to still be a threat, is a good deterrent before any crimes are committed, but if it is not, then we use important resources to incarcerate a person who otherwise could be a productive member of society or at least otherwise not drain resources while incarcerated.
 
 
The diminishing returns to incarceration are not discussed as much as the idea of tough on crime prison sentences is. We like locking people up, we like having a major deterrent in the form of incarceration, and we like the sense of justice we receive from imprisoning a bad guy for a long time. But we don’t like knowing that our criminal justice system in the United States has more people incarcerated that almost any other country on earth. We don’t like knowing that our prisons are costing society and that individuals released from prison may not have any avenue back into productive society as a result of being locked up for such lengthy times. It is important to consider the diminishing returns to incarceration to determine whether it is truly the best form of punishment to pursue and whether we would be better served by alternatives means of deterring sever crime.
Hearing Loss in War

Hearing Loss In War

Hearing loss for soldiers is a major problem for individual soldiers, the armies relying on soldiers, and the societies that soldiers return to after a war. First, soldiers have to be able to hear on a battle field. They need to communicate with each other and hear threats coming. But after the war, soldiers need to be able to hear to reintegrate into society. Hearing makes a big difference with finding a good job and getting back into daily life. Finally, hearing loss has a social cost as societies try to cover the healthcare needs of soldiers who return from serving their country.
When soldiers are on the battle field, their hearing is both crucial and under threat. We hold guns in a way that brings them close to our head so that we can aim and sight the weapon while shooting. This means that our ears are next to the loud bangs of the gun as we fire it. Beyond shooting a gun, soldier’s hearing is still threatened by heavy machinery, jets and tanks, large artillery weapons, and other explosions. There is no shortage of bangs, booms, and shrieks that could harm a soldier’s hearing.
Many of these noises are not important and can be blocked out to help protect a soldier’s hearing. Ear plugs to cut the sound of a gun being fired by our head, to block the screams of overhead jets, or to muffle the explosions of bombs can be great. But those same ear plugs can make it hard to hear the footsteps or whispers of an enemy combatant. They can make it hard to hear battle commands or the small sounds that help a soldier orient themselves in a territory where hostile forces could be hiding among civilians or natural terrain. Mary Roach quotes a military official in her book Grunt to describe the challenges with using ear plugs for hearing protection:
What are we doing when we give them a pair of foam earplugs? says Eric Fallon, who runs a training simulation for military audiologists a few times a year at Camp Pendleton. We’re degrading their hearing to the point where, if this were a natural hearing loss, we’d be questioning whether they’re still deployable. If that’s not insanity, I don’t know what is.
Earplugs and earmuffs are used to block out sound to protect hearing because we need our soldiers to have good hearing. But at the same time, they make it so that our soldiers can’t hear the things they need to hear. They diminish how much someone can hear to a level that would disqualify them from service. One result is that soldiers don’t always wear the ear protection they are provided and end up with substantial hearing loss. In both situations, whether they wear ear protection or not, there are serious costs to the soldiers on the battle field, and that can be the difference between life and death for that soldier and the soldiers depending on them.
When soldiers have hearing loss and return back to society the costs continue. Hearing aids are expensive and not always comfortable or super effective. In the Untied States we make a big effort to pick up the tab of medical expenses for our soldiers (even if we don’t always do a great job covering all the costs and providing the healthcare that veterans need). This means we continue to pay for battlefield hearing loss long after a battle has ended. And if we can’t get the hearing right, then the veteran may have trouble working, trouble reconnecting with family and friends, and trouble living a stable life. These individual costs add up and become societal costs if the soldier receives disability pay or becomes homeless. Pretty much everyone agrees we should take care of our veterans and their health, since they put their lives and bodies in the line of fire on behalf of our country, and this means that the costs of hearing loss come back home with the soldier. Hearing loss is a major problem for the army and nation whether in combat or back in civilian life.
Adjustable Space Shuttle Components - Packing for Mars - Mary Roach - 99 Percent Invisible

Adjustable Space Shuttle Components

Imagine driving your car without an adjustable seat. Imagine if every component of your vehicle was designed for an “average” sized person. Your seat probably wouldn’t fit you right, your legs may not reach the pedals well, or your head might be bumping up against the roof of the car. Standardized sizes that can’t be adjusted and that are based on an average for each person end up failing to actually fit anyone.
But super adjustable seats are not always a great thing either. In her book Packing for Mars, Mary Roach writes about the costs and engineering challenges that adjustable components on space stations present. “As things stand,” she writes, “NASA has to spend millions of dollars and man-hours making seats lavishly adjustable. And the more adjustable the seat, generally speaking, the weaker and heavier it is.”
When quoting NASA Crew Survivability Expert Dustin Gohmert, Roach includes, “The Russians have a much narrower range of crew sizes,” which means that they don’t have to adjust their seats, space suits, and various technology to the same extent as NASA which recruits astronauts with more varied bodies. Roach continues, “This wasn’t always the case. Apollo astronauts had to be between 5’5″ and 5’10”.” Today, however, we don’t want to limit someone’s opportunity to contribute their talents to space exploration and missions, even if they are a tad short or a bit taller than typical. We want the best people on our missions, and that means engineering expensive adjustable components with multiple potential fail points.
Adjustability is important in almost anything we design. Human bodies all come in different shapes and sizes and One-Size-Fits-All garments, seats, and utensils can normally do a good job for most, but not all of our bodies. Making the world more adjustable is definitely a slower and more expensive process, but it generally leads to better inclusion and better results for everyone. This isn’t necessarily the case for the space program, where designing ever more flexibility into the components of the system can mean more failure points and risk for everyone involved. Space travel is full of trade offs, and the trade offs can be expensive, time consuming, and even pose safety risks. Roach explores these tradeoffs in her book and looks at the ways we have calculated these tradeoffs throughout our history to show how much society has changed in terms of inclusion, thinking about designing for the average versus individual flexibility, and what it means to be human in spaces our bodies didn’t evolve to fit.
Imagine driving your car without an adjustable seat. Imagine if every component of your vehicle was designed for an “average” sized person. Your seat probably wouldn’t fit you right, your legs may not reach the pedals well, or your head might be bumping up against the roof of the car. Standardized sizes that can’t be adjusted and that are based on an average for each person end up failing to actually fit anyone.
But super adjustable seats are not always a great thing either. In her book Packing for Mars, Mary Roach writes about the costs and engineering challenges that adjustable components on space stations present. “As things stand,” she writes, “NASA has to spend millions of dollars and man-hours making seats lavishly adjustable. And the more adjustable the seat, generally speaking, the weaker and heavier it is.”
When quoting NASA Crew Survivability Expert Dustin Gohmert, Roach includes, “The Russians have a much narrower range of crew sizes,” which means that they don’t have to adjust their seats, space suits, and various technology to the same extent as NASA which recruits astronauts with more varied bodies. Roach continues, “This wasn’t always the case. Apollo astronauts had to be between 5’5″ and 5’10”.” Today, however, we don’t want to limit someone’s opportunity to contribute their talents to space exploration and missions, even if they are a tad short or a bit taller than typical. We want the best people on our missions, and that means engineering expensive adjustable components with multiple potential fail points.
Adjustability is important in almost anything we design. Human bodies all come in different shapes and sizes and One-Size-Fits-All garments, seats, and utensils can normally do a good job for most, but not all of our bodies. Making the world more adjustable is definitely a slower and more expensive process, but it generally leads to better inclusion and better results for everyone. This isn’t necessarily the case for the space program, where designing ever more flexibility into the components of the system can mean more failure points and risk for everyone involved. Space travel is full of trade offs, and the trade offs can be expensive, time consuming, and even pose safety risks. Roach explores these tradeoffs in her book and looks at the ways we have calculated these tradeoffs throughout our history to show how much society has changed in terms of inclusion, thinking about designing for the average versus individual flexibility, and what it means to be human in spaces our bodies didn’t evolve to fit.
Homelessness, Temporary Assistance, and Social Costs

Homelessness, Temporary Support, and Social Costs

Support in the United States is typically only given to those who are viewed as deserving. People who lose their homes in unpredictable natural disasters, people who are targeted by criminals, and those who simply had bad luck but were otherwise hardworking are worthy of help and assistance. Those who seem to just be lazy, who made poor decisions, were gullible, or who used drugs are not seen as worthy of our time or charitable efforts. The consequences of this plays out in homeless shelters and on the streets of our country every day. Without society feeling a need to help people who are viewed as deviant and unworthy, the role of supporting these individuals falls to the altruists, some church groups, and the families still willing to provide second chances. Often, any aid provided by these groups is conditional and temporary.
“Just as some women are homeless because their families can no longer support them, other women have little or no family support because they are homeless,” writes Elliot Liebow in Tell Them Who I Am. People lose social and familial support and can end up homeless. However, homelessness itself is often a reason for why support is taken away from people. Whether we are trying to support people because they are family, because we feel altruistic, or for other reasons, at a certain point any aid or assistance that we provide begins to feel useless. At a certain point, we cut people off and demand that they help themselves before we help them any further. Homelessness begets homelessness in this scenario as aid and assistance is taken away from those who need it most.
It is fine to believe that homelessness is a cost to the individual who becomes homeless, that it is a consequence of their bad behaviors and poor decisions, and to imagine that we are not responsible for the homeless individual. It is fine to decide that we won’t help them if they won’t help themselves. It is fine to decide not to help people who use drugs, drink to excess, and refuse to take the necessary steps to work and live as a productive member of society. But in doing so, we should be aware that these individuals did not become derelict in a vacuum. They were part of a society that failed at some point to direct them in a more productive way, to help them feel connected, to help them find meaning in their lives. We should also note that refusing to help individuals still pushes a lot of costs back onto ourselves and our societies.
At a gut-level, I don’t like the idea of simply providing housing, cleaning and sanitary services, counselors, and whatever else is needed to homeless individuals and potential drug users without  requiring them to get their lives back on track. I don’t like thinking that developing a system that provided a comfortable life without any effort for everyone might encourage more people to drop out of society and become useless druggies wasting their time away on the social supports and services of others. But I also don’t like that we treat the homeless like a plague, that we simply wish they would vanish, that we force them into dangerous situations on the streets where they could freeze overnight, die from heat exhaustion during the summer, and could be victims of crimes simply because they were defenseless and existed. I also don’t like that we will spend millions on emergency room healthcare costs, on police and jail costs, and have blighted sections of our cities because we won’t help the homeless by paying the up front costs to provide people housing and jobs. When I consider all the alternatives, giving the homeless a place to live, a care taker to watch over them, and helping provide basic sanitary services for them seems better than allowing the homeless to rot in the streets. I can’t imagine how anyone could ever come back from the streets, but perhaps more people could come back from a life where they are provided safe and sanitary spaces, even if we don’t think they deserve the effort it would take to provide such a life. I think we should at least try to treat them with dignity and give them a place where they can find dignity within themselves if they ever want to turn things around. Either way, we all live on this planet together, and we all create society together, so we cannot escape the costs of the homeless or wish the homeless away.
Homelessness and Health

Homelessness and Health

When I was completing an MPA I took a couple of classes out of the MPH (Public Health) program. In one of the classes our professor assigned a group of us to a project focused on ways in which public agencies can access Medicaid funding for housing assistance programs for homeless individuals. The basic idea was that homeless individuals utilize healthcare resources and are unable to pay for any services they receive. The government, usually the local city or state government, ends up covering the cost of care provided to homeless individuals. The alternative would be that homeless individuals cannot access healthcare, and that they become more likely to spread communicable diseases or to die from preventable causes wherever they manage to find shelter.
This means that local governments end up paying a lot for the healthcare needs of their homeless (Malcolm Gladwell once wrote a story about “Million Dollar Murray” who happened to live in my hometown of Reno). Our project was to see what was permissible under Medicaid guidelines to allow hospitals and local public health entities to access Medicaid funding to provide housing for individuals who would otherwise drive huge healthcare costs. Accessing Medicaid funding would shift part of the costs to the federal government and bring in more federal funding to allow more individuals in the area to receive support. The ultimate goal was to get people established with basic housing and in the long run cut down on the number of emergency room visits and medical services that people would need.
Being homeless can drive up healthcare costs by driving people into worse health states. This is something that is often overlooked when we think about the homeless. As Elliot Liebow wrote in Tell Them Who I Am, “In many cases, the very conditions of homelessness produced poor health care as well as poor health. On the one hand, the women sometimes failed to tell the doctor that they were homeless; on the other hand, even when doctors knew their patients were homeless, they often failed to appreciate the significance of that fact.”
As my small team of fellow graduate students completed our project, we focused a lot of thought on housing individuals with diabetes or asthma. If you are homeless and have either condition, managing your health becomes dramatically more challenging. Doctors have to spend additional time with homeless individuals to help ensure they know how to use their medications and have secure and temperature controlled places for them. But as Liebow’s quote notes, this doesn’t always happen, even if a doctor knows the patient is homeless. A person without a fridge may not have a place to store insulin without it going bad. They may not then be able to access insulin when needed, and may end up in the ER for an emergency that would never happen if we had simply ensured they had a place to live and keep their medicine. Homeless individuals with asthma may find themselves sleeping in a car in a parking lot, or under a freeway overpass. This means they are in a place where they are exposed to more car exhaust and dust, potentially triggering a severe asthma attack and necessitating another entirely preventable ER visit. In both cases if the had been given a place to live that wasn’t densely inundated with vehicle pollution or had a way to safely store their medication, they wouldn’t have had to go to an ER. Society could have have paid the cost of their housing, but instead we chose to let them be homeless and pay for thousands of dollars in medical costs after they had a problem.
The question our team looked at is how many ER visits does it take to offset the costs of simply providing a house first? And what types of services will Medicaid allow to be billed that help secure and individual in the housing they are provided? As it turns out, Medicaid does offer assistance for housing search, coaching on how to be a successful tenant, and other basic services to help ensure someone can live within any housing they are provided. It doesn’t, however, allow any reimbursement for rent or direct housing costs. Nevertheless some hospitals and some local governments are beginning to invest in housing first strategies. Any efforts that keep people out of the ER will save money in the long term, even if it is more expensive up front to provide someone with a place to live. The returns and benefits to a persons health ultimately outweigh the costs of providing housing as fewer healthcare services are needed.
The Costs of Work

The Costs of Work

One argument that is popular against welfare and social support programs is that they discourage work by encouraging people to sit at home collecting a welfare/disability/unemployment check rather than being a productive member of society. This is an argument that is picking up steam as we start to move away from the COVID-19 pandemic, as enhanced unemployment benefits run out, and as companies have trouble hiring back employees who seemingly don’t want to return to work.
To me, as I have heard people make this argument, I think that people make a mistake in who they think are the primary beneficiaries of welfare/disability/unemployment benefits and I think they make a mistake in how they imagine people receiving such benefits actually live. I think people imagine their own lives and living standards, and transpose those onto benefits recipients, except with money coming from the government and not from a job. They see people who are just like them, enjoy the same living standards, but choosing to be lazy instead of making the sacrifices that work requires. With this vision it is understandable that people get angry and want to tear down such social support systems.
I recognize that fraud, waste, and abuse of social support systems occurs. I know there are people cheating the system to get disability insurance and that they would find a way to go back to work if their checks ran out. I also know there are people abusing food stamps programs, and I generally believe it is better for people to be working productively than watching the price is right and not trying to do something valuable for themselves and others. However, I think these arguments are often more anecdotal than factual, and I think tearing down the whole system because a few people cheat is dangerous and misguided. I think the statistics demonstrate that the programs are necessary, and I think that additional considerations regarding the cost of work should also be made to help us better understand why there are “lazy cheats” out there.
Kathryn Edin and H. Luke Shaefer do a good job examining the real costs of work and the pressures these costs place on families and individuals to rely on social support systems rather than their own industriousness. Regarding welfare in 1996, the year it effectively died to be replaced by a new system, the authors write, “Work paid only a little more than welfare but cost a lot more in terms of added expenses for transportation, child care, health care, and the like. It was more expensive to go to work than stay on the welfare rolls.”
20 years later we still have this problem, especially in large cities where economic opportunities seem to be located. The costs that people face when trying to work rather than when accepting social support program benefits add up and are impacted by many factors beyond the wage than an individual can earn. Many cities are too expensive to live in, and as a result people have to commute very long distances to get to work, and that commuting adds up in terms of time, vehicle maintenance, or transportation fares. While working and commuting, children need to be watched by someone, adding child care costs into the equation. Time spent in a car or sitting on a bus also takes away from any chance to be physically active to help ones health, potentially increasing health care costs because an individual doesn’t have time to cook a healthy meal and doesn’t have time to go to a gym or get out on a walk.
Individuals who might be prone to laziness don’t have a hard decision to make when faced with these calculations. They can lose all their time, have to pay for child care, and end up with poor health and few extra dollars to spend if they pursue work. The alternative is to accept poverty, accept government aid, and at least reduce the costs, time demands, and stress that work adds to their lives. However, I don’t think most people enjoy or want this life, and I don’t think it is anything to be jealous of.
I don’t think the answer here is simply that employers need to pay more and that the minimum wage needs to be raised. I think that can certainly be part of the equation, but we clearly also need to help people live closer to their jobs, have better affordable access to healthcare, and afford quality child care that will help their kids and keep them safe. This is an idealistic and possibly unrealistic set of policy desires, but I think that is because we have misperceptions about who uses aid, and about our roles and responsibilities as individuals within society. I think that years of focusing on ourselves as individuals has in part contributed to the erosion or lack of development of social supports that would help tip the balance for those prone toward laziness away from staying home and toward working. As it is now, we accept the high costs of work and then criticize those who opt out.
Paying with Time - $2.00 A Day - Edin & Shaefer - Joe Abittan

Paying with Time

“One way the poor pay for government aid is with their time,” write Kathryn Edin and H. Luke Shaefer in their book $2.00 A Day.  In the United States we are wary of people getting things for nothing. We have a social support system that ensures people are worthy of government aid before they receive any support. We often tie work requirements, job search requirements, and drug screens to government aid, ensuring that people who accept aid are still making efforts to contribute to society. Still, even with these requirements people who don’t receive any government aid (at least not in the form of direct cash or in-kind welfare benefits) dislike the idea that so many people can access government aid for nothing.
 
 
However, as the quote from Edin and Shaefer shows, government aid is not really free, and the costs can be significant and even counter productive. On one hand it is understandable that locations to access government aid for things such as food, housing support, or direct cash transfers, would not be located on every street block. It makes sense that service centers would be relatively limited to reduce the government costs for administering programs. However, while this can make fiscal sense for government, it can also be a deliberate strategy to limit the number of people who access welfare benefits and receive services that are available to them on paper. Having a single location that operates standard business hours will necessarily mean that some individuals and families are incapable of accessing aid that is only distributed from that one location. A failure to co-locate aid offices also means that individuals and families may be strained in trying to access the aid that they need. Time can be a limiting factor that prevents people from accessing the aid and services which should help them get to a more stable economic position.
 
 
If people are able to make it to the location, aid often comes after lengthy applications, long lines and wait times, and lengthy commutes. Politicians may deliberately design aid programs to have these time costs as a way to reduce fraud and reduce the appeal and dependence on government aid, but for those who need it, it may mean forgoing necessary aid to help get one’s life back on track or to help put food on the table for a hungry family.
 
 
Often, the programs that provide aid are intended to temporarily support people until they can provide for themselves. However, if short-term aid is truly needed, to the point where the time costs are necessary to go through, then individuals may not be spending time looking for jobs, addressing child behavior issues, or otherwise using their time in a productive manner. These time costs are real, and can limit people’s opportunities in ways that actually make them more dependent on the governmental aid, and less capable of providing for themselves. The aid that people receive may seem as though it is free, but the time costs need to be considered, especially if programs are unwieldly and actually prevent people who do access them from taking steps to no longer need government aid.

Framing Costs and Losses - Joe Abittan

Framing Costs and Losses

Losses evokes stronger negative feelings than costs. Choices are not reality-bound because System 1 is not reality-bound,” writes Daniel Kahneman in Thinking Fast and Slow.

 

We do not like losses. The idea of a loss, of having the status quo changed in a negative way without it being our deliberate choice, is hard for us to accept or justify. Costs, on the other hand, we can accept much more readily, even if the only difference between a cost and a loss is the way we chose to describe it.

 

Kahneman shares an example in his book where he an Amos Tversky did just that, changing the structure of a gamble so that the contestant faced the possible outcome of a $5 loss or where they paid a $5 cost with a possibility of gaining nothing. The potential outcomes of the two gambles is exactly the same, but people interpret the gambles differently based on how the cost/loss is displayed. People are more likely to take a bet when it is posed as a cost and not as a possible loss. System 1, the quick thinking part of the brain, scans the two gambles and has an immediate emotional reaction to the idea of a loss, and that influences the ultimate decision and feeling regarding the two gambles. System 1 is not rationally calculating the two options to see that they are equivalent, it is just acting on the intuition that it experiences.

 

“People will more readily forgo a discount than pay a surcharge. The two may be economically equivalent, but they are not emotionally equivalent.”

 

Kahneman continues to describe research from Richard Thaler who had studied credit-card lobbying efforts to prevent gas stations from charging different rates for cash versus credit. When you pay with a card, there is a transaction processing fee that the vendor pays to the credit card company. Gas stations charge more for credit card purchases because they have to pay a portion on the back end of the all credit transactions that take place. Credit card companies didn’t want gas stations to charge a credit card surcharge, effectively making it more expensive to buy gas with a card than with cash. Ultimately they couldn’t stop gas stations from charging different rates, but they did succeed in changing the framing around the different prices. Cash prices are listed as discounts, shifting the base rate to the credit price. As Kahneman writes, people will skip the extra effort that would garner the cash discount and pay with their cards. However, if people were directly told that there was a credit surcharge, that they had to pay more for the convenience of using their card, it is possible that more individuals would make the extra effort to pay with cash. How we frame a cost or a loss matters, especially because it can shift the baseline for consideration, making us see things as either costs or losses depending on the context, and potentially altering our behavior.
Value in Healthcare

Value in Healthcare

A common complaint about healthcare in the United States is that it has traditionally operated on a fee for service (FFS) based model. It is a natural and easy to understand system, and generally the type of system that both patients and providers prefer. The idea is that you pay for the services you receive from a healthcare provider. So if you need a tooth extracted, you go and have the tooth extracted and pay for the extraction. If you need a skin check, you go and get a skin check and pay for it. However, this FFS model can encourage a lot of waste through unnecessary medical procedures, and the value in healthcare is sometimes lost when we wait until someone has a problem before we help them with their health.

 

A lot of government programs, employers, and insurance companies are making efforts to push against FFS in an effort to provide greater value in the healthcare services we pay for, but it is worth asking, what is value and how can healthcare systems provide it? Is value just better health? Is it services that a patient said they were happy about? Is it care that saves a life or can it just be care that makes a life somewhat more comfortable? Dave Chase helps explain one aspect of value in healthcare in his book The Opioid Crisis Wake-Up Call, “Value is defined as the ratio of quality to cost. Value increases as the quality of the care increases or the cost of care decreases.”

 

FFS encourages short appointments where doctors cram as much as they can bill for into the shortest possible time before moving on to the next patient to do the same. Value based models, on the other hand, seek to improve the quality of the care provided without adding more costs to the patient and their insurer. As opposed to simply cramming in more tests, treatments, and procedures to get more money, value based systems that increase quality focus on improving health outcomes while keeping costs stable.

 

Alternatively, value based models might seek to keep quality the same, but reduce overall costs. This can wade into territory we don’t necessarily want to support, such as cutting nurse management staff to keep overhead low, but it could also look like more comprehensive care to reduce costly re-admissions after a procedure. When we think about value and try to build systems around value, we ultimately have to think about quality and cost, and how those are related. We can cut pieces out of the system that are just meant for signaling and cut pieces out that might be unnecessary without diminishing quality. But at the same time, we really need to examine whether the pieces we want to cut really do help with the quality of the care, especially over the long run.

 

Thinking about value in healthcare isn’t entirely new, but it is receiving increased focus, which is important if we want to have a healthcare system that people actually trust and are willing to engage with when necessary.