Who is responsible for our health?

These thoughts started with reading an article about government requirements on food labelling.

To what extent should we take responsibility for our own health and what is the government’s role in encouraging or forcing us to live a healthy lifestyle and to provide medical services?

Most of us do things which may eventually contribute to our demise. It’s easy to know what to do to improve our health but often extremely difficult to do them. It can also be difficult to sit back and watch another person do something we think is wrong. Sometimes even for little things.

He or she who pays the piper calls the tune. When we hand over responsibility for health care,   the government and its bureaucrats could seek the right to dictate our lifestyles. If you smoke you will probably require more  health care and the rest of us have to pay for it – or at least there will be less for other people.

Economics provides partial guidance. Perfect competiton requires perfect knowledge. Therefore governments should require that as much information as possible should be available to all citizens with respect to all aspects of healthy living. This includes food labelling,

If we had a perfectly competitive economy medical insurance would be private and people who smoke probably would have to pay a higher premium. As to drivers with lots of accidents.

 

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One Response

  1. A major factor in things like health care, environmental regulation, or consumer protections are the phenomena of market externalities and public goods. The treament of these in neoclassical economics is limited to the point of being wholly inadequate. For example, simply allowing market forces to do their work in your above example of smokers buying health insurance is fine as long as the smoker decides to pay the higher premium. Otherwise, his higher than average health needs will go uninsured and he will either receive treatment from the public or go without treatment and die. In either case (and assuming the smoker is worth more to the system as a live contributor than a corpse), his actions have imposed costs on the system’s other participants.

    Neoclassical economics is not much able to deal with this other than by calling it an exernality and saying that it is the exception rather than the rule. However, in the real world every transaction has impacts on other people, who are not participants in the transaction but members of the system. This is because all real goods are actually bundled packages of public and private goods (or bads).

    Every person’s health choices have an incremental effect on the whole system. Thus it is not merely a private, personal choice. At the same time, regulation to protect every public good would probably do more harm than good. Thus the abstract role of government, as I see it, is to modify market mechanisms in cases where doing so is necessary to safeguard the entire system and where such intervention destroys less private wealth (which is hard to define precisely) than it creates for the public.

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