{"id":37,"date":"2007-11-12T23:07:44","date_gmt":"2007-11-13T05:07:44","guid":{"rendered":"http:\/\/aspiringeconomist.com\/index.php\/2007\/11\/12\/doctors-dont-offer-free-check-ups\/"},"modified":"2007-11-12T23:07:44","modified_gmt":"2007-11-13T05:07:44","slug":"doctors-dont-offer-free-check-ups","status":"publish","type":"post","link":"http:\/\/aspiringeconomist.com\/index.php\/2007\/11\/12\/doctors-dont-offer-free-check-ups\/","title":{"rendered":"Doctors Don’t Offer Free Check-Ups"},"content":{"rendered":"

In the comments section of Asymmetric Information: Car Trouble<\/a>, laura notes that:<\/p>\n

“…the extra money they [mechanics] charge may be a reasonable part of return of the work they did for getting the information we do not have”<\/em><\/p>\n

She makes a valid point that mechanics need to be compensated for their knowledge of car problems.\u00a0 It takes time and experience to be able to diagnosis the problem when a vehicle breaks down. It is standard for the diagnosis of a car’s problems along with an estimate for repairs to be free.\u00a0 The knowledge necessary to make the diagnosis is subsidized by the repair work.<\/p>\n

Why is work done this way?\u00a0 Doctors don’t offer free check-ups and recover the cost of their time from the surgeries they recommend.\u00a0 My guess is that diagnosing a car’s problem has a very low marginal cost.\u00a0 Mechanics already own diagnostic tools and it is usually quite easy to recognize that a part is not working properly.\u00a0 Similarly, the recommended course of action is almost always straightforward: replace the part.<\/p>\n

This is not true when it comes to health care.\u00a0 Often diagnosing a medical condition is the most difficult and crucial aspect of care. Doctors cannot tell my grandmother why she experiences spells of dizziness nor can they explain why my mom occasionally feels tingling in her toes.\u00a0 The hit television drama House<\/a> provides a glimpse of how baffling some conditions can be to even the smartest medical minds.\u00a0 The human body is vastly more complex and interrelated than any automobile.\u00a0 It’s a lot harder to replace someone’s lungs then the air filter in their car.\u00a0 Moreover, numerous treatment options exist.<\/p>\n

When a problem and its solution are relatively straightforward, producers will offer free quotes and consumers should generally choose the low-cost provider.\u00a0 Lasik eye surgery fits under this category and it has become significantly cheaper in the face of competition.\u00a0 When a problem and its possible solution is more complex, it makes sense to pay the producer for specific advice and avoid conflicts of interest.\u00a0 Most people do this already.\u00a0 It is why we have long-term relationships with our auto-mechanic and ask our car enthusiast friend for advice.\u00a0 It is why we pay a specialist for his opinion, and seek out experts with reputations they wish to keep.\u00a0 Obtaining information about the intricacies of an automobile or a human body is costly. When you pay for this information, it is crucial to provide the right incentives.<\/p>\n

This is not always easy to do. As laura noted in her comment, the book Freakonomics<\/a> discusses how real-estate agents have an incentive to sell your house at too low of a price. Tyler Cowen describes another example in his latest book<\/a> and on his blog when he recounts<\/a> hiring a guide while traveling in Morocco:<\/p>\n

“The guides don’t cost much up front (“I am your friend.\u00a0 I love United States.\u00a0 I show you for free.\u00a0 Very good friend.\u00a0 No charge nothing.”), but at the end of the day they ask you for money.\u00a0 I don’t just mean ask, I mean beg, plead, cajole, and finally, if need be, demand.\u00a0 Avoiding this spectacle — humiliating to both parties — is itself worth at least twenty dollars.\u00a0 In the meantime the guides bring you around to merchants of their choosing, and receive kickbacks on anything you buy.\u00a0 So don’t expect the guide to do your bidding or to bring you where you want to go.”<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

In the comments section of Asymmetric Information: Car Trouble, laura notes that: “…the extra money they [mechanics] charge may be a reasonable part of return of the work they did for getting the information we do not have” She makes a valid point that mechanics need to be compensated for their knowledge of car problems.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-37","post","type-post","status-publish","format-standard","hentry","category-economics"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/posts\/37","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/comments?post=37"}],"version-history":[{"count":0,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/posts\/37\/revisions"}],"wp:attachment":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/media?parent=37"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/categories?post=37"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/tags?post=37"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}