Last November, I had the chance to go to Dubai for the first time to participate in the World Economic Forum Summit on the Global Agenda.
Peter UbelOne of the most interesting people I met there was Peter Ubel, a practicing physician who is also trained in the ways of behavioral economics and psychology (here’s Peter’s Huffington Post write-up of his Dubai experience).
Peter has just published the book Free-Market Madness, in which he combines both of his areas of expertise. The book’s focus is a critique of unfettered markets. He says:
Think of this attack as one designed neither to defeat free markets nor to force capitalism to surrender, but rather to prevent markets from gaining more territory than they deserve. (p. xiv)
His argument is not that markets are immoral or produce negative externalities. Instead he argues that people often (but not always) make bad or irrational choices. His book is an exploration of “what happens when the invisible hand meets the unconscious brain.” (p. xv)
The marketplace is crowded now with books riffing on the cognitive bias literature (many are monosyllabic — e.g., Nudge and Sway). What’s distinctive about Free-Market Madness is Ubel’s willingness to advocate slightly more aggressive government interventions — or gentle shoves to improve the quality of people’s lives. Instead of merely relying on Nudge-like changes of defaults and informational solutions, he’s open at times to old-fashion command and control regulation.
Peter tells the hilarious story of trying to sell his book to an editor who, after asking to know the bottom-line, take-home message of the book finally asked: “Are you aiming for a nuanced argument?” Peter goes on to write:
“Yes,” I replied, and explained that I planned to write a book that would be both nuanced and captured in a marketable sound bite. I believe I lost him at the word yes. (p. 191)
I find this hilarious because I had virtually the same “Is it nuanced?” discussion with a book editor a few years ago. Potential trade authors beware: Nuance doesn’t sell. But that’s just what Peter has tried to do.
He takes head-on the difficulty of distinguishing acceptable risky behavior (such as sky diving or driving a car) from harder-to-accept risky behavior (such as eating or drinking or smoking to excess). He often resolves the difficulty not with theory but with vivid observations:
I have cared for many patients who, when trying to quit drinking alcohol, have experienced what are known as withdrawal seizures. … I held the hands of a 40-year-old man recently — his belly swollen like he was pregnant with triplets, his skin the color of a faded dandelion — while he cried about his inability to stop drinking beer. In fact, we recently had a patient in our hospital who was so addicted to alcohol that he swallowed three dispensers’ worth of Purell hand sanitizer and collapsed in his hospital room with a blood-alcohol level three times the legal limit. And to return to cigarette smoking, I witnessed dozens of patients, their voice boxes removed because of throat cancer, who, despite having a chance of avoiding a cancer recurrence, still insisted on smoking through their tracheotomies. I cannot equate people who continue smoking with people who can’t get out of L.A. (p. 135 to 136)
There is an undeniable power to these examples — but part of me still wants to deny them. They are all ex-post examples where the state of the world turns bad, and these examples don’t give much weight to the pleasure that smoking and drinking gave to these and other people earlier.
Peter knows there are real concerns with a “nanny state” that restricts citizens’ freedom — as parents legitimately restrict the freedom of an infant, confident that they know better what is in the child’s best interest. He wants to use the lessons of behavioral economics and psychology to provide principles for greater and lesser deference to individual decisions. But I would have been happier with a richer list of specific applications to assure me just what is at stake with this more aggressive assault on contractual freedom.
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I would submit that the risky behavior of allowing the state to decide what is and isn’t risky behavior for individuals has not worked out well for humanity in any past attempt.
“Peter knows there are real concerns with a “nanny state” that restricts citizens’ freedom”
Would that be a “Madoff” type freedom to rob people, while the SEC does nothing? The freedom of Wall Street to be free of regulations, and laws, that would put them in jail?
Peter Ubel should read the ‘Wisdom of Crowds’. That might change his perspective.
Anyone else remember how Prohibition worked out? How the 21 drinking age is working out on college campuses? Has Holland’s permissive drug laws turned that country into a bunch of addicts?
Please.
Furthermore, there seems to be a direct correlation between economic freedom and standard/quality of living.
This book seems like one worth skipping over.
We already live in a bit of a incoherent state of affairs. I’m obligated to contribute my money to health care for seniors and the indigent (which I am glad to do). But I have no recourse when I the people whose health care I’ll be paying for engage in behaviors likely to increase its cost — e.g., downing the fast-food double cheeseburgers.
Justice for all involved would seem to dictate that either a.) I should be relieved of my obligation to support health care for people who engage in health-endangering behaviors over which I have no control or b.) I should be granted, through my duly elected representatives, control over health-endangering behaviors among those for whose health care I pay.
It seems like choice “b” is more desirable for the population’s health, though not necessarily its freedom. But I propose a third way: The Opt Out. We could enact laws against health-endangering behaviors (like fast-food double cheeseburgers), but you could opt out of the entire system. That is, you could down double cheeseburgers or ride a motorcycle with no helmet, but taxpayers wouldn’t be on the hook for your hospital bills. Freedom stays intact and the indigent have a chance at coverage.
The problem with The Opt Out — and this is, I think, the crux of Ian’s post — is how to handle addictive behaviors and other health-endangering factors over which folks have little or no control.
To P
What is wanted in state regulation is the role of honest broker. We have regulations, laws, that say your right to punch your fist ends where my nose begins. The “free market” is supposed to exist so that my nose can economically be punched? I would rather hope not.
Some rules are necessary for the efficient running of markets and the state needs to be active in that role. They are not telling you what you can or cannot do individually. The government tells everyone they must play by the same rules and that is what the government is doing by using regulation of the markets.
Our economic problems now seem to be because the state decided, in the last eight years, that they would neither make any decisions on what is risky or enforce the regulations that were already in place. A truly libertarian and corrupting, stance.
There needs to be a name for the process that happens to people when they are imprinted by extreme experiences. They seem to go into a cognitive shift that skews their world views to an extreme. Then from these new positions they form models of the world that they feel we should all buy into. It’s like living with Trump for a year and basing your personal fiscal policy off of what you observe from during that time.
Markets need to be as free as possible, with gov playing a role that promotes clarity, contract enforcement, and transparency. Further government intervention should be viewed as chemotherapy and used sparingly.
Is there a real problem with allowing individuals to destroy themselves through risky decisions?
If there is, is the solution to this problem worth destroying quality of life for the remainder of free society?
Is this book worth reading?