Public health and market failures
I’m not particularly worried about any large-scale Ebola outbreaks in the developed world. It’s easier in the developed world to run effective quarantine and to track down those who might have been exposed to an infected and contagious person.
That certainly doesn’t mean Ebola isn’t worth worrying about. The burden of Ebola in Africa looks likely to be huge. Even where the total number of deaths remains very low relative to other African diseases like malaria, Ebola has an incomparable potential to disrupt economic activity. I’d put even odds that economic disruption caused by completely understandable fear around Ebola will kill as many people as the disease itself. When taxicabs become ways of catching disease and hospitals terrifying, and when a worker with flu symptoms could well be somebody who’ll kill all your staff if he comes in to work and touches people – it’s really not good.
Pandemic protection is a strong public good. Any dollar’s investment in pandemic protection protects everybody who could be at risk: it’s non-rivalrous. Every dollar spend improving hospitals in Africa, training doctors, providing medical equipment, and developing emergency response protocols is a dollar that protects each and every person in Africa, and by extension the rest of the world where there’s risk of pandemics’ spreading (think Bangladesh, Pakistan and India, not Europe and America). We all benefit from it. There is then a strong case for government funding of pandemic prevention efforts. There’s also a really good case for things like Kickstarter, or PledgeMe, running campaigns on it to also help out.
The World Health Organisation is the outfit that’s supposed to have an eye on the ball on this stuff. Unfortunately, in my view, the WHO has gone astray. Or at astray from what it should have been.
In the public health world, the social welfare function is either minimising the number of deaths, minimising incidence of morbidity, or maximising the number of disability-adjusted life-years or quality-adjusted life years. In economics, it’s maximising some weighted utility function. The two yield very different outcomes and are what drive my dissatisfaction with the WHO’s prioritisation.
Suppose we have several kinds of initiatives that would increase DALYs and reduce the overall burden of sickness and disease. Some of these, like polio eradication, provide health benefits without any particularly large cost as viewed by the person receiving the polio vaccine.* Nobody enjoys having polio. Nobody would voluntarily seek to have polio. If polio ceased to exist, the world would be a better place. Others of these, like regulations on soda, tobacco, alcohol, fatty foods, and salt, can increase DALYs and reduce the overall burden of sickness and disease too, but they come at a cost in terms of private experienced consumption benefits: many people like soda, smoking, drinking, and eating tasty things.
In the public health world, if a dollar’s worth of effort yields greater expected DALY benefits in dietary and lifestyle regulation than it does in pandemic avoidance, that dollar should go to dietary and lifestyle regulation. In the economics world, we start by looking for market failures and target funding where markets won’t do well on their own. And when it comes to lifestyle regulation, we need a rather harder look at things than just DALYs where choosing agents might well prefer to consume unhealthy things, at DALY cost, in exchange for current consumption benefits.
If we had to rank-order things by a very rough guess as to where the market failures are worst, I’d rank them as follows:
- Pandemic readiness and response, especially in developing countries;
- Antibiotic resistance and superbug mutation;
- Development of new antibiotics;
- Contagious diseases affecting developing countries where there’s no particular profit in pharmaceutical investment: malaria and a big pile of others;
- Other contagious disease investigation and response;
- Vaccination promotion;
- Poor information about risks of smoking, diet and alcohol in the third world
@EricCrampton That ratio is about right. The priorities (roughly) reflect the burden of disease.
— George Darroch (@mrdarroch) October 5, 2014
This isn’t just a “get off my lawn and leave me alone” thing. It’s “why are you spending a hundred million bucks protecting people against themselves when you’re under-resourced for pandemics?!?” thing.
Shouldn’t we first target the health priorities that stem from market failures and impose existential risk?
Update: I’ve had request for clarification of what market failure means. My encyclopaedia entry is here. Further discussion here.
* Or at least there wouldn’t be costs to getting the polio vaccine if the CIA hadn’t managed to convince everybody that vaccinations are spy mission.