On Thursday Noah put up a brief post on the Market Priesthood. It relates the story of Steven Levitt and Stephen Dubner, of Freakonomics fame, meeting David Cameron, of Coalition Government fame. Levitt and Dubner tried to persuade Cameron that health care was just like any other part of the economy. Cameron was, apparently, not impressed.
Noah riffs off this story:
This is exactly what I call “free market priesthood”. Does Levitt have a model that shows that things like adverse selection, moral hazard, principal-agent problems, etc. are unimportant in health care? Does he have empirical evidence that people behave as rationally when their health and life are on the line as when buying a car? Does he even have evidence that the British health system, specifically, underperforms?
No. He doesn’t. All he has is an instinctive belief in free markets … I don’t think Levitt has a model. What he has is a simple message (“all markets are the same”), and a strong prior belief in that message.
Then yesterday in the Guardian Patrick Butler picks up on the proposals put forward by the Department of Education to local authorities the power to outsource pretty much all of their children’s services apart from adoption. [Read more…]