Risk Markets And Politics

Monday, February 27, 2006


A philosophical interlude — Apropos of prohibition, Libertarians might want to address the economic obstacles to drug legalization. David Friedman once wrote that preventing someone from taking drugs is coercion, but preventing them from shooting you isn't. Unfortunately, the state of risk-sharing in healthcare is so inefficient that using recreational drugs or doing anything unhealthy effectively does impose on others' property in the form of higher insurance costs.

In order for health insurance coverage to be priced more specifically, genetic and other tests would have to be made available to insurance providers. There is an understandable concern that such information is "private", but since it is relevant to an insurance contract, there is no real justification for withholding it. Any reference to this kind of privacy is actually a Rawlsian appeal to social justice; one's bad luck or the price of one's bad habits should be shared with others. (Keep in mind, this point is basically a challenge to Libertarians.) Regarding some of the bad "luck", as disease-prone genes become more expensive, there will be greater demand for genetic intervention, thus the scare quotes around luck.

Recall that the distinction between "cure" and "enhancement" has long been a litmus test for the legitimacy of drug use. The double-negative (i.e. eliminating an illness) has been sanctioned while pursuing changes beyond the norms of performance and mood is usually frowned upon — but already legal drugs in the United States have been advertised in ways that blur the line between cures and enhancements, e.g. Viagra and its ilk. This is occurring unreflectively and points to a difficult philosophical problem on the horizon. Specifically, where is the line drawn between the elimination of hereditary diseases through gene therapy and the engineering of more positive traits? Especially when one is the "side-effect" of the other?

In relation to sports, performance-enhancing drugs are roundly disapproved, but life is not a zero-sum game. Excellence is not a negative externality. Should the same logic hold in genetics?

"Freedom" is "power" expressed as a double negative. Some of the most important philosophical problems of this century will relate to the identity and difference of these two concepts, whose similarity happens to be especially apparent in Mandarin Chinese.


  • I am not at all sure that a guy who smokes a little pot, has a genetic heart disorder, blasts a few lines of coke, or has a few beers interferes with the property rights of other risk-sharers any more than the accident-victim, sky-diver for his anniversary, etc. Will we allow the actuary into our homes, to watch if we have a traction-providing bath mat or always use 3-points of contact when we climb up a ladder? Not to decend onto the slippery slope, let us look at the balancing of privacy against the property interests of others as a continuum...Life is not a zero sum game, as you say. Not every potentially affected property interest must trump every privacy right. Risk is luck. Otherwise, it is a fixed game. Reasonably minimize your risk, but keep risk in the game.

    By Anonymous Baron, at 10:23 PM  

  • "Not every potentially affected property interest must trump every privacy right."

    Yes, but where is the line drawn? Some of the risks you mentioned are clearly more quantifiable and material than others. Just trying to keep Libertarians honest when they clamor for the lifting of prohibitions.

    I agree that, logically speaking, the elimination of all risk is basically incompatible with life.. all life involves risk-taking -- and it can be very valuable. I don't mean to seem too pusillanimously pro-hedging.

    By Blogger Jason Ruspini, at 9:50 PM  

  • hmm, interesting. what happens to the model in other advanced countries which offer free medical care as a universal social good, which is funded from tax revenues? where there is no insurance system in place at all? of course, the lifelong smoker is still being covered by all the non-smokers when they end up in an oxygen tent later in life, through the tax system...

    interestingly, so-called 'socialised medicine' countries operate at 1.5 to 2 times the efficiency of the 'privatised' US health care sector, for a more inclusive system and better overall health outcomes.

    By Blogger Sean Reynolds, at 9:28 AM  

  • True, the healthcare/social insurance situation in the US is one of contemporary Gordian Knots and leaves much to be desired. By "efficient" I think you mean less expensive (owing to pricing power), but less expensive doesn't necessarily mean more efficient, or higher quality. Not that I have an answer -- these are the most difficult, important and interesting risk-sharing problems today.

    By Blogger Jason Ruspini, at 6:40 PM  

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