One of the basic results of normative economics is that market outcomes under competition are socially optimal – the common claim is that the free market is efficient. Calling market results “good” is certainly a value judgment, but this claim has an appealing basis in positive, scientific economics: the First Fundamental Theorem of Welfare Economics says that allocations in a competitive market are Pareto optimal, so no one can be made better off without making someone else worse off. You might not believe that Pareto optimality should be the sole criterion for judging outcomes (I certainly don’t) but it’s an excellent starting point; if there’s an opportunity to give more pie to Adam without taking any away from anybody else, we should do it.
Most markets turn out to be reasonably close to undistorted and competitive, so economists think that policymakers should keep their hands off and let the miracle of competitive efficiency occur. But there are a number of problems that arise with markets, and these turn out to be very common in healthcare. As a researcher this makes me happy: there’s often nothing too interesting to learn about a competitive market, and “do nothing” isn’t a very sexy policy recommendation. Socially, though, these imperfections are big problems.
One common such imperfection in medical care is the presence of externalities, in particular external risk benefits or costs. An externality is a cost or benefit that accrues to someone other than the decisionmaker (click here for a pretty graph and a basic overview). They’re easy to see in the case of vaccination. When you get vaccinated you protect yourself but you also protect everyone else you come into contact with; every person in your society gains a little bit of herd immunity. Since people don’t experience the full benefit of the vaccine, they’ll tend to get less of it than they should from a societal standpoint. We have a simple solution for this that could have come right out of an economics textbook – vaccines are subsidized, and in many cases mandatory.
|Taking one for the team?|
This is probably familiar to lots of you, but the nature of lots of preventable illnesses in poor countries is such that risk externalities can be pretty subtle and the solutions much less obvious. To take one example, consider HIV transmission and concurrency vs. serial monogamy in sexual relationships. People in Southern Africa commonly have more than one concurrent sexual partnership; in contrast, people in Asia and the West have no fewer lifetime sex partners, but tend to have only one at a time. The practice of “concurrency” in sexual pairings has been shown to substantially increase transmission rates at a societal level, because the amount of HIV in the bloodstream is highest within the first month. If you don’t have sex with another partner until after that window passes, the odds that you’ll infect them drop substantially. Now suppose we convince someone to stop having more than one sex partner at a time, and instead become serially monogamous. Doing this might convince them to be safer in other ways as well: maybe they’ll have fewer sex partners or less risky sex, both of which would directly protect them. But if all they do is re-sequence their partners to have one at a time, then they get no direct benefit from serial monogamy at all. It is their partners that are protected. The risk benefit of serial monogamy per se, rather than other behavior changes, is entirely external. Even if people understand that serial monogamy is safer, we might see fewer people doing it than we’d like, as they cynically decide to protect only themselves.
My suspicion is that there are a lot more of these sorts of risk externalities present across the field of global health. If you get enough people in an area to use bednets you’ll start to cut malaria risk for everyone; male circumcision directly protects only men and not women from HIV, but a circumcised man indirectly protects all his partners. A lot of cool research projects could come out of finding them, measuring them, and figuring out how to design programs and structure incentives to deal with them. I’m still not sure what we should try to do about the concurrent sex partners issue, but the more people I can get to start thinking about this stuff, the more good ideas we’re likely to see.