Money and Medicine

Via Aaron Carroll, a new survey of doctors reports that 42% of them think they're overtreating their patients. But why are they overtreating their patients? The top answers were fear of malpractice suits, mandated performance measures, and too little time with patients. Aaron finds all three unlikely and then adds this:

Notice what’s not in the top reasons? Money. Could it be that doctors might practice more aggressively because when they do, they make more? Well, only 3% believed that financial considerations could influence their own practice. Most, however, thought that other physicians would be affected by such things.

I'm sure doctors aren't alone here. We're all pretty sure that other people are motivated by grubby concerns like money and status and power, but we're equally sure that our own motivations are always pure and humanitarian. See, for example, both sides of every political fight ever in the history of the world.

Anyway, Aaron says in a followup post that more than a few doctors were pissed off about his suggestion that money influences their decisons. I don't blame them. Still, the rest of us should probably assume that money does indeed influence them, just like it influences every other human being on the planet. As usual, doctors are pretty good at diagnosing others, but not so good at diagnosing themselves.

It's probably not a wise use of time to obsess too much about David Brooks, but.....I just don't get the guy. Today he argues that the global economy is on the verge of a train wreck and neither Democrats nor Republicans are thinking big enough:

We need an approach that is both grander and more modest. When you are confronted by a complex, emergent problem, don’t try to pick out the one lever that is the key to the whole thing. There is no one lever. You wouldn’t be smart enough to find it even if there was.

Instead, try to reform whole institutions and hope that by getting the long-term fundamentals right you’ll set off a positive cascade to reverse the negative ones.

Simplify the tax code. End corporate taxes and create a consumption tax. Reshape the European Union to make it either more unified or less, but not halfway as it is now. Reduce the barriers to business formation. Reform Medicare so it is fiscally sustainable. Break up the banks and increase capital requirements. Lighten debt burdens even if it means hitting the institutional creditors.

Wow. Eliminate corporate taxation! Completely reform the EU! Fix Medicare! Break up the banks! Declare a debt holiday! And do it all now now now. This is coming from a guy who likes to think of himself as a Burkean conservative?

At a grand policy level, it's not even that I disagree that much. I've written in favor of all these things except for simplifying the personal tax code (sort of trivial on the scale Brooks is writing about) and reducing the barriers to business formation (the World Bank ranks us pretty satisfactorily on this already). But whether or not these are good ideas, this is a pretty mind-boggling list of things to just casually toss off with one sentence apiece. I mean, what's the pitch to the Europeans? You've probably never thought about this before, but you need to either dissolve the eurozone or create a United States of Europe. Tick tock, time's a wasting. What's it going to be? [Cue Jeopardy theme music.]

It's probably not a good idea to dash off a column right after you've jerked awake in a cold sweat in the middle of the night. Especially one week after writing a column castigating President Obama for cynically proposing ideas that "couldn’t get passed even when Democrats controlled Congress." But implementing a VAT, getting healthcare costs under control, reforming the tax code, and breaking up the banks could? In which universe?

In the universe we actually do live in, Democrats are willing to talk about the kinds of things on Brooks's list. Maybe not as bravely or as fully as Brooks would like, but at least they'll entertain his ideas. But Republicans? They're dead set against any tax reform that isn't effectively regressive; they're dead set against a VAT; they're dead set against any new revenues for Medicare, which is plainly required as part of any serious reform; they're dead set against breaking up banks; and they're dead set against any kind of debt relief. Until conservatives like Brooks manage to get their more rabid compatriots to abandon this antediluvian approach to just about everything, there's not even a faint hope of getting anything on his wish list done. That's Job 1. In the meantime, there's hardly any point in writing about anything else.

Yesterday I said that although Rick Perry's immigration gaffe is getting a lot of attention, his "real problem is that Thursday's debate badly shook up a GOP establishment that was pretty uneasy with him already." Adam Serwer dissents: "According to a forthcoming study from Harvard's Theda Skocpol and two of her graduate students, Vanessa Williamson and John Coggin, immigration is among the most important issues for self-identified 'Tea Party' Republicans."

This is actually a pretty minor disagreement, since I too believe that Perry's immigration apostasy is a really big deal. Still, it's worth explaining briefly why I said what I said. Basically, I'm piggybacking on the views of political scientists Martin Cohen, David Karol, Hans Noel, and John Zaller, who wrote an influential book a couple of years ago called The Party Decides: Presidential Nominations Before and After Reform. Their contention is that the key fight isn't so much the primaries themselves, but the "invisible primary" that's fought for several months before voting ever starts. During this time, candidates fight for the attention and endorsements of party insiders, as represented by interest groups, state party leaders, funders, media bigwigs, and others whose support is either important in its own right (because lots of people take their cues from them) or whose support is an important signal of acceptability. Hans Noel explains:

Our argument is that the party is not just the formal DNC and RNC chair and the official hierarchy. It’s all of the people who have made a commitment to be part of the group that’s coordinating together to try to advance the party’s interests.

You could say the voters count too, because they’re doing some type of coordination and trying to encourage their friends. But their contribution is much smaller, because they don’t have as much influence. So we focus more on the high-profile actors, but we have an expansive definition to encompass all the elite actors who are trying to help the party achieve its collective goals.

And those goals are to find a nominee who can win, but who is also someone they can trust. Whether they can trust them because they’re in the right place ideologically is part of it, but it’s richer than that. It’s someone who they think will advance party goals over their own personal goals.

If you buy this argument, it means that although tea party unhappiness with Perry over immigration is what's getting lots of attention, it's really just a superficial sign of a deeper danger. Perry's real problem is that his inability to address an obvious and predictable problem with the base — which reveals either laziness, ineptitude, stubbornness, or all of the above — makes him an unreliable candidate. If this view starts to harden among party insiders, they'll eventually start to signal their support for Romney or some other candidate, and the rank-and-file will follow their lead.

By all accounts, Perry's disastrous debate performance has hurt him badly in the invisible primary. He's still got plenty of time to rejuvenate himself, but he can't afford too many more outings like last Thursday's. The party is watching.

Dan Ariely says you shouldn't be too specific in your compensation practices because it motivates people to game the system instead of working hard. For example:

A consulting company once told me they made a rule that if you stayed until 8 in the office, you could order food and use the car service to get home. So what happens? A ton of people are there at 8. Nobody’s there at 8:05.

Really? A "ton of people" who probably billed out at $300 per hour were there at 8? At a cost of maybe 30 bucks in food and another 50 for the car service? Sounds like this strategy worked great — as long as you understand that it's primarily aimed at increasing billable hours. What's the problem?

From Ryan Avent, surveying both the weak current economy as well as the spectacular destruction about to be let loose in the near future:

It's just shocking to think about the dangers that loom and consider the extent to which they're driven by governmental failures.

And yet, to a large extent, governments are merely responding to the wishes of the public. It's a simple fact that the average Joe (or Dieter or Emile or Carlotta) believes pretty strongly in folk economics — low inflation, a strong currency, and balanced budgets — and decidedly doesn't believe in bailing out people who aren't them. On the latter front, this applies both to Germans who don't want to bail out Greeks and Americans who don't want to bail out underwater homeowners.

It's all perfectly understandable — and about as self-destructive as insisting that we should plant crops by the phase of the moon. Which might be about where we're headed if we don't get our act together soon.

Jonathan Bernstein picks up on one of my hobbyhorses:

Here's the thing. Barack Obama isn't as popular now as he was in January 2009. This is not exactly a little-known fact; indeed, we fortunately have some really good indicators of exactly how popular Obama is overall, and they're not all that obscure.

What this means is that sloppy journalists can get endless mileage from picking out any subgroup in the nation and finding out that, gee, Obama has lost popularity there!....To know whether any of these stories is actually news, it's absolutely necessary to compare Obama's decline within the group in question to his overall decline. If it's more, then you have something; if it's the same or less, then you're at best illustrating how an overall decline works within that subgroup.

Roger that. This usually bugs me most during the post-election recap season. In 2008 the media was full of breathless reports about how Obama gained support among married women or McCain lost support among Hispanics or some such. But of course they did. In 2008 Obama did a lot better among all voters than Kerry did in 2004, and McCain did worse than Bush. So it stands to reason that Obama also did better among most demographic groups and McCain did worse. In 2008, for example, several writers suggested that Obama did especially well among churchgoers, but in fact he didn't: he performed about 9 points better than Kerry overall and about 10 points better among churchgoers. There was nothing to it.

Anyway, this is just another example of "compared to what?" That's a question that should be on everyone's minds a lot more than it usually is.

Brad Plumer points today to a Dallas Fed report that, rather amusingly, demonstrates that a big reason Texas has done well during the recession is because of Fed policy. Roughly speaking, most of the Fed's monetary policy works through bank channels, and since Texas banks were in better shape than most (thanks to Texas's mild housing bubble), the Fed's actions were especially effective there. That's pretty interesting. But for sheer comedy gold, this chart is my favorite:

That "debased" dollar that tea partiers keep screaming about? Actually, it's not really very debased in the first place. But it has weakened over the past couple of years, and it's weakened especially against Texas's major trading partners, primarily Mexico. And the Texas economy has benefited from that.

Maybe Rick Perry needs to send Ben Bernanke a a fruit basket or something?

Polls show repeatedly that people (a) approve of Obama's specific proposals to boost the economy, but (b) disapprove of Obama's handling of the economy. Weird! But then again, maybe not. Andrew Sprung points out that there's a reason Obama lost support after the debt ceiling deal even though the public largely supported his approach:

He wanted to cut spending and raise taxes, and so put the U.S., by his lights, on a firm financial footing for ten years and put the deficit wars behind him. That's what he told the American people, repeatedly, through the summer. They believed him. They supported him — polls showed strong backing for his "balanced" approach to deficit reduction. And he couldn't do it — not because he was happy to just cut spending, but because he lashed himself to the debt ceiling mast, notwithstanding the fact that Republicans were swearing their willingness to row him (and the country) over a cliff. He is being punished in the court of public opinion not for trying to compromise but for failing to get a compromise.

The difference is important.

Yes it is. And you know who understands this really, really well? The Republican leadership.

This is one of the reasons I've long been skeptical of the notion that Obama should have fought harder for progressive legislation even when it was likely to fail. "At least people would know where he stands," goes the usual mantra. And that's true. But what people would also know is that he didn't have the juice to get anything done. You can stand on a soapbox forever and tell people that this is all the fault of those obstructionist Republicans, but most of them aren't paying attention. They'll just vaguely hear that Obama failed yet again and start to think that the guy's a loser.

Nothing succeeds like success. And nothing helps a president more than an economy that's actually doing well. The details of failure just don't matter that much, unfortunately. And Republicans know it. For them, congressional dysfunction is a feature, not a bug.

I think Christina Romer is pulling a fast one in her op-ed defending President Obama's jobs plan. She takes on several arguments against his proposal, and this is one of them:

WE NEED A HOUSING PLAN, NOT MORE FISCAL STIMULUS The bubble and bust in house prices has left households burdened with too much debt. Until we deal with this problem — perhaps by providing principal relief to the 11 million households whose mortgages are larger than the current value of their homes — we’ll never get the economy going.

The premise of this argument is probably true....[But] recent research shows that government spending on infrastructure or other investments raises demand even in an economy beset by over-indebted consumers....In the recovery from the Great Depression, economic growth, which raised incomes and asset prices, played a big role in lowering debt burdens. I strongly suspect that fiscal stimulus will be more cost effective at speeding deleveraging and recovery than government-paid policies aimed directly at reducing debt.

Hmmm. Romer seems to be attacking a straw man. No one — at least no one arguing that we need a better housing plan — is claiming that fiscal stimulus won't spur economic growth, or that economic growth won't lower debt burdens. Of course they will! The argument is that fiscal stimulus isn't enough by itself, or, alternately, that it might not give us the biggest bang for our buck. Among state economies, there's a very strong correlation between deleveraging and unemployment, which suggests pretty strongly that programs aimed at targeting underwater mortgages would be extremely helpful.

But Romer's only real response is that she "strongly suspects" that fiscal stimulus is the best way of addressing this. As it happens, I'm willing to give a "strongly suspects" from Christina Romer a lot of weight. Still, the role of housing in driving the recession and its continuing role in keeping demand depressed is pretty clear cut, and this suggests that any effective jobs plan should include both fiscal stimulus and an aggressive mortgage forgiveness program. It's possible (likely, in fact) that an aggressive housing plan is politically infeasible, but still, from an economist I'd like to hear an economic argument either for or against. I don't think we have one here.

I know this is beating a dead horse, but fun is fun. Here are the results of the latest Winthrop poll of South Carolina Republicans. 75% think "socialist" describes Barack Obama pretty well, 30% think he's a Muslim, and 36% think it's likely he was born in another country. Note that releasing his long-form birth certificate barely moved the needle about his birthplace.

In other, more substantive news, the poll suggests that Rick Perry is only slightly ahead of Mitt Romney, sort of a surprising result for such a bedrock conservative state. And this was before last week's debate. I don't think Perry is a dead duck or anything, but I do think that his frontrunner status has always been thinner than it seemed, and it's way thinner now. Public Policy Polling confirms this: "Thursday night part of our Florida poll Romney led Perry by 2. Friday-Sunday part Romney led Perry by 10. Debate did matter." He better get cracking.