Tuesday, August 31, 2010

The Best and the Brightest

Cross-posted from The Agenda on National Review Online.


When Pulitzer prizewinner David Halberstam used the title “The Best and the Brightest” in his 1972 book on the Vietnam War, he was using it ironically. The Kennedy and Johnson administrations had recruited the best and brightest scholars and leaders to Washington, with the thought that these brilliant minds would lead the nation to its greatest heights.

It didn’t work out that way. Vietnam permanently damaged the country and led directly to many of the foreign policy problems we have today. The best and the brightest, Halberstam observed, concocted “brilliant policies that defied common sense”—reminding us that intelligence is not the same as wisdom. This distinction between intelligence and wisdom was also behind Bill Buckley’s contemporaneous contention that he “would rather be governed by the first two thousand people in the Boston telephone directory than by the two thousand people on the faculty of Harvard University.”

In health care policy, the difference between intelligence and wisdom is too often blurred. I was reminded of this when re-reading an open letter, penned by 23 prominent economists, sent to President Obama to insist upon the importance of health reform, and of certain parameters thereof.

Many people believe that the academic community should serve as the arbiter of what is a good or a bad idea for health care reform. (This idea is especially popular among academics.) During the Obamacare debate, the President spoke often of how “every single serious idea” on reducing health-care costs was incorporated into the legislation. He was speaking truthfully—if “every single serious idea” is understood only to mean those that are widely accepted by the academic community.

There were, and are, a lot of other good ideas that the President ignored: moving to an individual market for health insurance; expanding consumer-driven health care; increasing cost-sharing for government programs. But those ideas, and others with a free-market bent to them, were contrary to the President’s ideological orientation, and their principal exponents were outside of the academic orbit.

Academics see themselves as the most disinterested observers of the health care world: or, more precisely, the ones who are most committed to a rational and humane health care system. Analysts from industry, in this view, are corrupted by their economic interests; and analysts from think tanks (especially conservative ones) are hopelessly biased by their ideology.

But is the academic world non-ideological? At least 90 percent of health policy academics, if not more, are left-of-center. Populist conservatives like to complain about this, but in fact this phenomenon does a greater disservice to liberals than it does to conservatives, because it diminishes the quality of their work.

Academic explorations of health care policy suffer from several handicaps, handicaps that are exacerbated by ideological conformity. They include:
  1. Group-think. Academics are rewarded for publishing articles in peer-reviewed journals. What this means in practice is that academics are rewarded for gaining the approval and acceptance of other academics: a process that reinforces group-think at the expense of rigorous criticism.
  2. Homo academicus. Because the incentives of academics revolve around the approval of others, rather than objective economic failure or success, it is difficult for academics to relate to the health care world as it actually exists: one in which economic incentives drive the behavior of patients, doctors, hospitals, insurers, and product manufacturers. In the economic world, there is such a thing as failure, in a way that is difficult for many tenured professors to fully appreciate.
  3. Elitism. If you study the health care system in a lot of depth, it is natural to feel that your views should carry more weight than those of people who haven’t studied the issue as much. It is easy to be pessimistic about the unsophistication of ordinary people, to believe that ordinary people will benefit from the guidance of disinterested experts like yourself, and to dismiss the ideas of those who you perceive to be less expert, and less disinterested, than yourself.
  4. Bad data. Ludwig von Mises and Friedrich Hayek observed long ago what has become known as the economic calculation problem: that, in a centrally planned economy, there is no way to gain an independent sense of how the market values various goods and services. As a result, academics are often overconfident of their ability to predict how various reform proposals will play out in the real world.
This isn’t to say that all academics are bad, or that academics never do useful research. It is merely to suggest that academics should approach their craft with more humility than they often do. There are many other sources of health care research that academics would be well-served to consider:
  1. Think tanks. Because of the ideological conformity of the academic world, think tanks provide a useful counterpoint. Indeed, many right-of-center think tanks were explicitly created as a way of providing a home for academically-oriented policy experts who found it difficult to gain acceptance in the left-of-center academic community. In my own policy reading, I find that think tanks are an excellent source of original, non-consensus thinking on health care policy.
  2. Industry. The health care industry puts out quite a bit of data, and also a fair amount of policy analysis. However, academics, especially liberal ones, frequently dismiss analyses from industry as corrupt, because they assume that industry is out to advance its economic interests. But whether an analysis advances one’s economic interests is independent of whether or not the analysis is accurate. And not all analyses are driven by greed: for example, CIGNA (a health insurer) can make money regardless of what type of health plans people use, so its analysis of why people choose some plans over others is highly useful, as it takes advantage of the company’s proprietary consumer research.
  3. Wall Street. Wall Street analysts produce outstanding research on the health care industry that well exceeds the rigor of most academic studies. This is true for three reasons: (a) Wall Street analysts are incentivized to accurately assess the economic prospects of health care companies in real time, whether good or bad, in a non-ideological fashion; (b) Wall Street has considerable economic resources with which to conduct research that, in the academic world, requires grant applications and bureaucratic approval; (c) analysts gain immediate feedback, in the form of stock prices and company performance, as to whether or not their predictions have proven accurate. Hence, they are able to know when they have made mistakes, and are able to learn from their mistakes. However, the work of Wall Street suffers from two major drawbacks: (a) it is limited to those areas of the health care industry that are relevant to the financial markets; (b) it is distributed to paying clients, and is not generally available to academics or the public. The best research does leak out, however.
  4. Industry consultants and professional societies. There are plenty of health care analysts, at places like Deloitte and Ernst & Young, who consult for private companies and provide much of their research to the public for free. Societies like the American Academy of Actuaries do the same (here is an excellent analysis of consumer-driven health care from the AAA). Consultants often get tarred by the left for their industry associations, as PriceWaterhouseCoopers unfairly was for their insurer-sponsored study on the impact of Obamacare on the cost of health insurance. But again, either the analysis is correct, or it’s not. Ad hominem attacks against the authors’ motives don’t advance the debate.
All of this is to say that I hope we can improve the quality of the health care debate by focusing less on where health care research comes from, and more on how good that research actually is: is its data accurate? Are its methodologies sound? If we can do more of that, instead of prejudicially dismissing the views of those who come from institutions we suspect, we are bound to learn much from each other.

12 comments:

  1. I don't get the source of your bitterness. Care to explain?

    Moreover, this seems over-thought. After all, academics educated the very individuals you cite and author the very studies you use to support your arguments in other posts. You going to stop citing academic publications or cease quoting scholarly authors?

    David Halberstam is a Harvard grad.

    Von Mises attended the University of Vienna and was awarded his doctorate from the school of law.

    Why does one have to denounce one group to support another anyway?

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  2. Yes, academics should have more humility. Perhaps the same level of humility it must take to think yourself superior to all academics.

    I think that the reason academics are sometimes more sure of themselves is that many rely on actual research, evidence, or data rather than talking points scripted around ideology. I include conservative leaning academics in this bunch. They get my respect, too.

    Know who doesn't get my respect? Those with group think (Think tanks), elists (consultants and professional societies), those with bad data (Wall Street), and those who actually don't understand what happens in a room with a patient (industry).

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  3. Hi Philip,

    I'm hardly bitter, or denouncing one group to support another -- as you point out, I regularly cite academic studies. I come from a long line of academics myself, and spent most of my life in the academic community. Indeed, that is why I feel qualified to comment on the subject.

    Bill Buckley was a Yale grad, by the way -- does that mean he wasn't allowed to criticize the Harvard faculty? (I myself went to MIT and Yale, FYI.)

    There is a big difference between the peer-review process in the natural sciences, where experiments are more carefully controlled and more easily re-tested, and the peer-review process in the social sciences, where ideology plays a far bigger role and where there is little to no ability to conduct controlled experiments. Indeed, I would argue that the social sciences leech off of the credibility that the the peer-review process has built in the natural sciences. This problem is even worse in the humanities.

    I'm simply calling it as I see it. Is it really that remarkable to observe that academics often show insular and elitist tendencies, and that there are plenty of non-academics who have worthwhile things to say about health policy? My observation that the peer-review process tends toward group-think is even a source of complaint within the natural sciences -- where it is far less of a problem than it is in the social sciences.

    If you disagree with the substance of what I'm saying, please say so -- I think I have demonstrated a willingness to engage substantive criticisms -- but I would hope you would stick to that rather than making faulty imputations about my emotional state.

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  4. Hi Calvin,

    I don't think myself superior to anyone -- but I will give myself credit for spending more time reading academic studies than most health policy academics do reading non-academic studies. There are a few academics who make the effort to read non-academic work -- but they are the minority.

    If you think my work is ideological, and revolves around scripted talking points, you haven't read enough of it. Was I reciting talking points when I called a recent WSJ editorial "irresponsible," or when I endorsed the Swiss healthcare system? I say what I think -- rightly or wrongly -- and gain no income from my policy writings.

    As to your last paragraph -- whose eloquence I admire -- I'd be interested in some evidence-based elaboration. I'd love for you to go through the last five books on health policy published by AEI Press, and point out the group-think and the talking points. I haven't heard a single consultant or professional society argue that they alone understand their industry; indeed, I see them cite a broad range of sources in their monographs. As to the data from Wall Street, if it's bad data, esp. relative to academia, I'd love for you to point out where and how. And as to industry not understanding what happens in the room, you must not be aware of how much industry pays physician consultants to explain to them exactly what happens in the room. Liberals have long been trying to ban this practice, because they don't think industry participants should have access to such insights.

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  5. Avik,

    You sound like this:

    ***
    I claim that bloggers are generally uninformed and biased. They don't think things through. They are just not credible. Plus they can't spell. But not all of them. I've cited a few in the past, the good spellers. But as a class they'd be well-served to read the dictionary.

    Disagree with me? Prove me wrong. Go on. I'm happy to engage in a dialog. Just tell me what I said that's inaccurate.
    ***

    Come on! Making a claim and then insisting others find support for the opposite before you'll reconsider is not clear-headed.

    You write very well and make some good points. Almost always they are well supported. This piece is pure opinion and not well-grounded. I'm not even sure why you wrote it.

    What's the point? What is it you are reacting to?

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  6. Hi Philip,

    These are fair points. I could have done more to point out examples of the behavior I was referring to. I will do so at another time. Thanks for your thoughts.

    A.

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  7. Avik I thought this was an excellent post, and I think I have a pretty good idea of what inspired it. I too have noticed a tendency among some academics who write on health policy to assume an inherent superiority of peer-reviewed academic literature as if it is the be-all end-all on a given topic, ignoring and/or discrediting valuable research coming from other places. The letter you mentioned was just linked to in that fashion, as part of an argument from authority implying that this letter had significance because of the status of the people signing it. (Not to mention that for all the claims of industry bias, some of the academics signing the letter also stood to gain from the Democratic health care proposals.)

    Philip, I don't think that is a fair or even remotely accurate portrayal of Avik's tone and argument in this post. I think he was reluctant to call people out by name were he to link to examples, as am I because there is no need for this to turn into a personal attack against anyone in particular. But if you regularly read many of the prominent commentators on health policy in the academic world you will notice this tendency, I don't get why you think Avik is just burning a straw man here.

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  8. Enron, Worldcom, Lehman Brothers, Bear Stearns, LTCM, AIG. Dow 36,000. Wall Street epitomizes group think (think tanks too for that matter). Meh. Hayek, U of Chicago. Krugman, Princeton. Meh. Academics dont appreciate economic failure. Industry appreciates only profit, after all, incentives matter (cox-2 inhibitors, defective defibrillator,.churning of total joints). Meh.

    As to your larger point, I agree that we should examine the ideas and judge them on their merit. However, I do prefer to know where the ideas are coming from. It is difficult to avoid bias even when you are trying. It simply alerts you to look for the bias. We require it among physicians who publish or speak at meetings. Sometimes the doc who was paid over $1 million to advise on a product speaks a little highly about its merits.

    Query- You are trying to influence some sort of outcome in health care policy. You are an expert. Why should your efforts at engineering a new system not be considered engineering or central planning? Isn't anything other than an organically originated, bottom up system essentially central planning, just planning it the way you want it to run?

    Steve

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  9. Thanks AB -- I appreciate your comments very much.

    Steve -- Sure, I have no problem with disclosure of compensation etc -- transparency is a good thing. All I'm criticizing is the tendency of some to presume the arguments are invalid without examining them with an open mind.

    As to your query: "central planning" involves limiting the space that individuals have to make their own decisions about what to do (esp. what to buy, sell and how to set prices). There are degrees of central planning, of course: if 0 is libertarian utopia and 10 is USSR, there can be shades of grey. All things being equal, I seek to put as much decision-making power in the hands of the individual rather than the government. That is the quintessence of the unplanned economy.

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  10. I recall that in "Best and Brightest" Halberstam quotes Sam Rayburn commenting on the Kennedy staffers, "I just wish one of them had been elected dogcatcher."

    From which I take that Rayburn feared those best and brightest did not know or much care how to influence people except by the coercive power of government.

    I don't really care whether a politician is an Ivy Leager or a Texas-Leager - if the politician ignores what motivates and inspires average people, I have no use for her (or him as the case may be).

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  11. Hi Mike, I'm with you -- unfortunately that understanding of human nature and human incentives is widely absent in our political class.

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