Me and my 18 week pregnant wife saw the midwife today. She asked us about getting checked for some kind of diabetes. She said that the risk is very low unless there are some kind of warning signs like that it runs in the family. We didn’t meet any of the warning signs so we declined, and she thought that made sense. No big deal.
We just put a price on the babies life. That’s a taboo tradeoff.
Daniel Kahneman puts it this way in Thinking Fast and Slow,
The survey of parents’ reactions to a potentially hazardous insecticide mentioned earlier also included a question about the willingness to accept increased risk. The respondents were told to imagine that they used an insecticide where the risk of inhalation and child poisoning was 15 per 10,000 bottles. A less expensive insecticide was available, for which the risk rose from 15 to 16 per 10,000 bottles. The parents were asked for the discount that would induce them to switch to the less expensive(and less safe) product. More than two-thirds of the parents in the survey responded that they would not purchase the new product at any price!
There is theory and there is practice. In theory people don’t trade a discount for an increased risk for their child’s safety – a cheaper car seat, a more potent insecticide, or not getting tested for diabetes. In practice, we do it all the time!
This is where we get articles like this. Apparently, FDA approved prescription drugs kill hundreds of thousands of people. Why? Big Pharma, and we should be scared. The problem is that over 210 million Americans take prescription drugs, do some back-of-the-envelope math and we have roughly 1 in 1,000 people taking pharmaceutical drugs and dying from them. Every last pill could be taken by an individual making perfectly rational informed tradeoffs and we would still get large numbers of deaths. That’s not a problem that needs to be fixed.
“Probably wonts” becomes “always wills” when we start talking about large numbers of people. 1 in 10,000 risk becomes 1 actual death when we talk about 10,000 people. That’s when people start whipping themselves up into moral outrage over nothing.
When people think this way, and I observe it a lot, what are the incentives of the FDA? Nobody thinks of the FDA as an agency with the mission statement of optimizing tradeoffs. They think of it as an agency with the mission statement of keeping us safe. If the system is truly democratic and people think this way, we’ll end up with drugs that are too expensive, too few, and too ineffective, because the FDA demands that drugs be too safe on behalf of consumers.
If the FDA is truly preventing a market failure, the relevant question is, which is further away from optimal -- the too safe FDA system or the not safe enough non-FDA system?
It is easy to pretend like hell will break loose without the FDA, but that is not as clear as many think. I think it is based on the ever popular ignore economic growth completely fallacy. It goes like this – if you want to know what the world would look like without policy A, just look at the world before we had policy A.
The problem with that is that as people get richer, they’re willing to pay a premium for less risk. Thanks to general economic growth, we’re a lot richer today then we were before the FDA, so people’s impressions of what the world would be like without the FDA are irrationally pessimistic.
I imagine the headline, “1,000 baby deaths a year because parents can’t afford extra tests.”
