Demand curves slope downward

by on October 11, 2006 at 10:13 pm in Education | Permalink

Check out Paul Krugman mentions in the blogosphere

Addendum: His column today on the Medicare drug bill is excellent, and I otherwise would have linked to it.  Here is one partial version.

Second addendum: Gary Karr, Medicare's chief spokesman, sent me the following in an email:

A fact or two which Krugman leaves out about the Medicare drug coverage:
— If you don’t want a doughnut hole, you don’t have to have it.
> In every area, there are plans which cover drugs in that coverage
> gap.
>
> — There are also plans offering no deductible.
>
> — The original estimate of premium was $37. Then it went down to
> $32. In every state but Alaska, you can get coverage for less than
> $20. And in many states, there are plans for less than $10 month.
>
> — When the Medicare bill became law, people said no companies would compete for the Medicare drug coverage. That has turned out not to be true, and the competitive marketplace has helped drive down costs for taxpayers and those in Medicare.

econstudent79 October 11, 2006 at 10:52 pm

What a very interesting and thought provoking article. If you put the shock or adverse punishment on the vertical axis (price) and the quantity of negative behavior on the horizontal axis (quantity) it does appear to act like a demand curve. An increase in punishment results in a decrease in bad behavior. It is amazing to me how many things that supply and demand relate too. It is scary to me that parents would allow their kids to go through this but if nothing else works I guess it is their only choice.

A Tykhyy October 12, 2006 at 1:41 am

Brr.

Tom West October 12, 2006 at 6:35 am

First, I’m not sure I’d say that Bryan *has* that particular view. Rather he’s written an article *defending* that view. Not quite the same thing.

Still a thought provoking, if shudder inducing, article.

Sheldon Richman October 12, 2006 at 9:26 am

Treatment? The school staff calls it punishment. Bryan, like Thomas Szasz, happen to be right. This article certainly doesn’t undercut their position.

Jason Voorhees October 12, 2006 at 10:13 am

I found my answer as I kept reading:

While many psychologists agree with Israel that aversive therapy can work as a last resort in a very few cases to control dangerous behaviors�the school contends that the skin shocks are almost 100 percent effective in reducing those�there’s less consensus on whether a method like skin shocks can really cure someone.

Israel’s theory is that by shocking to discourage dangerous behavior, the therapist buys time to use positive approaches that teach patients how to control themselves. But evaluating whether the school has succeeded with students is difficult because they arrive with such different talents and troubles. Higher-functioning students�those with normal IQs but severe emotional problems, who constitute about half the school�can have normal lives: The center’s website features testimonials from kids who have joined the Marines, or have been the first in their family to complete high school, or have even gone on to college.

bernard Yomtov October 12, 2006 at 12:00 pm

Bryan Caplan’s view that mental illness does not exist

Exactly what training and experience does Caplan have that should cause us to give his opinion any weight whatsoever?

Oh? He’s an economist? Then why does his opinion on this have any merit?

Caplan is fond of sneering at those who are “economically illiterate.” Is he “psychiatrically literate?”

Brian Doherty October 12, 2006 at 2:12 pm

How exactly does a detailed example of the (reasonably well understood) fact that punishing people can cause them to change their behavior undercut Szasz’s/Caplan’s position? Please expand.

Sheldon Richman October 12, 2006 at 2:30 pm

re Voorhees: The staff calls it punishment! Punishment is often represented as therapy. If I feel better after a glass of wine at dinner, is the wine medicine? Was I sick? Look at what it is, not at the B.S. scientistic rationalization.

re Yomtov: The people with “expertise” still have not proved the existence of mental illness. They only assert it. How could one prove it? “Mental illness” is a category mistake long exposed by Thomas Szasz, an M.D. and psychiatrist.

Austin October 12, 2006 at 2:40 pm

Bryan Caplans view about mental illness not being real or not existing is really dumb, you guys are right he must not get out much. It has been proven that mental illnesses are real, hell, i have a cousin who has downs syndrome.

bhauth October 12, 2006 at 3:18 pm

Way to combine Clockwork Orange with the Prison Experiment! I’m don’t know enough to say this should never be used but I’m certain that this Israel fellow should not be running things.

AZ October 12, 2006 at 4:13 pm

First, thank you Steve Miller for posting a link to Caplan’s paper.

As for the perverse behavior of:
Sometimes, the student gets shocked for doing precisely what he’s told. In a few cases where a student is suspected of being capable of an extremely dangerous but infrequent behavior, the staff at Rotenberg won’t wait for him to try it. They will exhort him to do it, and then punish him.

In this context with the whole “shocking the person” concept it seems like people are appalled, but when I watched “The Mind of Mencia” the other night (think it was Mencia) and Carlos was discussing the differences between maternal and paternal parenting, he gave an example of “Don’t touch the stove, it’s hot”. His example was that his maternal figure will keep repeating “No, don’t touch it, it’s hot” no matter how many times the child questions why he shouldn’t touch the stove while his paternal figure, after hearing the child ask, “What is hot and why should I not touch it?” a few times will say, “Go touch it and find out”. Then the child burns his hand and finds out what “hot” is, and that he probably should not touch something when someone tells him it is hot. Many people laughed and I ask if someone can tell me the difference between goading the child into touching the hot stove or trying to get him to hurt himself and shocking him to condition him not to hurt himself. I could post a mountain (or a valley, depending on your point of view) of thoughts here on this topic, but will stop here before I write a book.

bernard Yomtov October 12, 2006 at 6:25 pm

I have yet to see you show any indication that you have the slightest notion even what exactly it was that Bryan Caplan argued. If you have no clue, then your opinion about it isn’t worth a hill of beans.

And I have yet to get any information from you about it.

However, I did read the article and remain unimpressed. Much of it is circular – “people behave that way so that must just be how they want to behave.” It seems to escape notice that people voluntarily seek treatment for mental illness. Also, Caplan seems to have a habit of quoting Szasz, on hallucinations for example, to support Szasz.

I do agree with one point, however. People have preferences over beliefs. This includes Caplan.

Mark October 12, 2006 at 7:22 pm

Arguments like those of Caplan and Szasz rest upon using a debatable semantic point — whether mental illness meets the set of individually necessary and jointly sufficient conditions accepted by scientists and doctors characterising an illness — to make a moral point. Whatever the merits of the semantic argument, arguments about whether mentally ill people should be treated against their will or whether it is acceptable at all to treat mentally ill people do not follow. I could imagine similar debates about whether someone with intestinal worms or someone born with a cleft palette have an “illness.” That doesn’t affect the empirical fact that there are effective ways to treat these conditions or that these conditions are regarded as genuinely undesirable in most places.

As for the article itself, it seems to me that empirical evidence should settle whether this is more effective than alternative forms of treatment. Well-adjusted adults of normal intelligence possess a kind of moral reasoning where they can determine right from wrong even if placed in an entirely unique situation, provided they are around people of the same cultural background. I think it is safe to say that many of the students at this school do not possess this same kind of reasoning.

Nor is it necessarily something that can be easily taught. Just as some people do not possess the ability to manipulate 3-D objects in their minds, consistently apply rules of spelling or read faces, I would imagine there are some people who honestly cannot figure out the right way to act in a given scenario. Therefore, they need to learn case-by-case and through trial and error. This leads to the seemingly perverse tactic of getting students to do something wrong so they can be zapped. They may not be able to reason out the right way to act on their own.

All that said, I do wonder just how powerful and painful the electric shock is. That would certainly affect my answer to the normative question of whether the program is a good thing.

Constant October 12, 2006 at 7:47 pm

And I have yet to get any information from you about it.

Tu quoque, and for me to provide the information wasn’t necessary to my point.

If you read the article and understood it, it should be clear that Bryan Caplan isn’t denying the existence of the phenomena. In your response, you have not addressed a single one of his arguments, but rather have sought to dismiss his paper as a whole by claiming that it suffers from this that and the other vaguely described defect. For example, Bryan Caplan has a strong response to Seymour Kety’s remark that schizophrenia has a powerful genetic component, in which Bryan Caplan decisively refutes the implied reductionism of the remark (that something is a disease if and only if it has a powerful genetic component), but you do not answer it. Nor do you answer anything else.

DK October 12, 2006 at 11:17 pm

IMHO, the key part of Caplan’s paper is this quote from Szasz:
“Unbacked by gold: paper money is fiat money — the politically irrestible incentive for debauching the currency, called ‘inflation’. Unbacked by lesions, diagnosis is fiat diagnosis — the medically irresistible incentive for debauching the concept of disease, called ‘psychiatry'”

It’s hard for me not to laugh at anyone who thinks the Federal Reserve system is “debauchery.” Or at someone who wildly complains about other people’s “debauchery” while also complaining that society isn’t sufficiently tolerant of difference.

Steve Miller October 12, 2006 at 11:58 pm

Isn’t “debauch” a synonym for “debase” in other contexts? DK, are you dismissing an argument because of thesaurus abuse? That must be some kind of fallacy… ad synonym???

Sheldon Richman October 13, 2006 at 5:46 am

Down Syndrome is not a mental illness.

Constant October 13, 2006 at 7:52 am

The linked paper fails to deal with or even mention suicide

I disagree with the claim that a paper of this nature must be comprehensive. But surely suicide is not a problem. Romeo and Juliet killed themselves for quite understandable reasons. I would not judge them mentally ill.

fails to take the next step and ask about preferences-over-preferences: the desire to change one’s own behaviour.

Actually I think he does mention preferences-over-preferences. It may not be in this paper – I might be confusing it with something else he wrote (I seem to recall he’s a critic of a preference-over-preference approach to action – he prefers a unified approach – but I’m not sure of this). But in any case, why would preference-over-preferences necessarily indicate mental illness? There are people who like to vegetate in front of the TV but who, in retrospect, wish they had done something productive with that time. Are they mentally ill?

but it’s not a conclusive dismissal of the whole of psychiatry.

I don’t think that is its purpose. He may have made some excessive remarks which I do not remember about the whole of psychiatry, but his main purpose was not to attack psychiatry but to encourage economists to consider performing an economic analysis of the mentally ill by treating the mentally ill as homo economicus with extreme preferences, rather than as a broken creature that is not amenable to economic treatment.

Bernard Guerrero October 13, 2006 at 10:23 am

Jason,

_But strategically avoiding pain and pursuing pleasure does not a good, healthy person make._

Really? I tend towards the view Heinlein had a character toss out in “Stranger in a Strange Land”: Of all the nonsense that twists the world, the concept of ‘altruism’ is the worst. People do what they want to, every time. If it pains them, to make a choice- if the ‘choice’ looks like a ‘sacrifice’ — you can be sure that it is no nobler than the discomfort caused by greediness… the necessity of having to decide between two things you want when you can’t have both. The ordinary bloke suffers every time he chooses between spending a buck on beer or tucking it away for his kids, between getting up to go to work and losing his job. But he always chooses that which hurts least or pleasures most. The scoundrel and the saint make the same choices….

bernard Yomtov October 13, 2006 at 11:07 am

Constant,

for me to provide the information wasn’t necessary to my point.

Nor to mine really. What I said originally is that if you wnat to attck the reigning orthodoxy in some field you ought to understand it. I expressed doubt that Caplan knew much about psychiatry. You clearly know less, since you equate it with astrology.

Nor do you answer anything else.

Caplan claims that mental illness is simply a preference for certain behaviors that we term “mental illness.” I pointed out that many people who are mentally ill seek treatment for their illness. That means they prefer to behave differently.

How does Caplan deal with this. He denies it:

Neither is the fact that few alcoholics will admit their priorities; expressing regret and a desire to change is an excellent way to deflect social and legal sanctions.

Well, that’s a handy excuse. Note that it’s similar to the argument about hallucinations. They are a problem for the theory, so the answer is that peopale only claim to hallucinate. Is this logic or ideology?

Caplan talks of physical illness as a constraint on behavior. That’s less convincing than it sounds. I had a cold yesterday. I could have, if you’d put a gun to my head, gone out drinking and partying. Instead I went to bed early. Was my cold a constraint? And it’s worth noting that mental illness has consequences. Depressed people commit suicide. There’s a constraint for you.

Caplan, and Szasz, work both sides of the street on the question of physical bases of mental illness. Where they haven’t been found they crow about that. Where they have been found they pronounce them irrelevant.

Finally, his “rent-seeking” explanation of psychiatry is ridiculous. It sounds roughly like the creationists’ claim that many thousands of biology are enaged in a massive conspiracy to prevent creationist arguments from being heard.

Constant October 13, 2006 at 12:02 pm

There is nothing wrong with attacking orthodoxy, but understand it first.

My understanding of the paper is that the primary purpose and interest is to make certain assertions, not to attack certain assertions. Whether Caplan has misconstrued the orthodoxy as making assertions contrary to his, is a question that you may want to raise. But it is not of primary importance here. What is of primary importance is the assertions he raises, and his primary audience is other economists, and finally, his paper is entirely inside of his domain of expertise, which is economics, just as Gary Becker’s work is inside his domain of expertise, which is economics, even while it also touches on matters that other sciences touch.

An analogy would be the economics of law. It is entirely legitimate for Ronald Coase and David Friedman to do economics of law – this lies entirely inside their domain of expertise. If they make assertions about the actual history of law or the actual laws on the books, then they step outside of their domain of expertise. But otherwise, they are doing economics, and since they are economists doing economics, they are working fully inside their own domain. This is true even if their conclusions have implications for law.

Bryan Caplan is an economist making economic characterizations, and since psychologists do not know economics, his assertions lie outside their domain of expertise. Therefore the objections of the psychiatric profession to his paper – if there are any – are the assertions of ignorant laymen, unless they are addressing aspects of his paper that step outside of his domain, or unless they know something about economics, which, frankly, I highly doubt many of them do.

Constant October 13, 2006 at 5:03 pm

Bernard Yomtov,

Caplan understood and was competent to understand the most important positive claims he made – specifically, he made claims about the economic analysis of some behavior. These lie within his area of expertise. If the views of psychiatrists contradict his claims about the economic analysis of behavior of their patients, then they are trespassing on the domain of economics, which they are in all likelihood not competent to do. If it is indeed true, as you seem to imply, that the very field of psychiatry depends on assumptions which contradict Caplan’s key points about the economic analysis of behavior in terms of capacity and preference, then so much the worse for psychiatry, since the psychiatrists are making assertions they are not competent to make.

I will give you an analogy to history. Historians often make claims about the economies of past times. Historians are, for the most part, not competent economists. The result is what you might expect: the historians are very often woefully deluded about economics. And, since they are wrong about economics, they are consequently wrong about the economies of the historical periods they are studying. In the clash between economists and economically illiterate historians, the economists have often proven the historians wrong. Did the economists trespass on a field in which they have no competence? No, not the way I see it. The economists stayed within their own field – economics – applied to the data of history (and on that, they relied on historians), drawing economically informed lessons. An example of this is the clash between economists and economically illiterate historians over the causes of the Great Depression of the 1930s. In this clash, the economists are right and the economically illiterate historians are wrong (and continue to be wrong).

I have already conceded that in his direct statements about psychiatry, about what psychiatry says, Caplan may be misinformed. That was the key point of your previous comment, i.e., that Caplan does not know much about psychiatry. But my point was that the point of interest of his essay was not his direct statements about psychiatry, but his statements about the economic analysis of aberrant behavior.

Bernard Guerrero October 13, 2006 at 7:01 pm

How can anyone claim that someone who seeks treatment has a preference for their untreated state?

Seems to me that there is a difference between seeking treatment because you don’t like your state and seeking treatment because the social context you’re living in imposes costs on you because of your state. You may like being a cannibal, but Western society imposes costs on cannibals that outweigh your pleasure in devouring your fellow humans. Are you insane? Yes in the U.S.A, no in the highlands of New Guinea, at least until rather recently.

bernard Yomtov October 13, 2006 at 9:35 pm

Does Caplan claim this? Quote him. If you can find the quote, you can probably find the argument. And if you can find the argument, then you can quote the argument and answer it. And yet, here you don’t do that. Curious. It is almost as though you are not arguing in good faith.

Most glaringly, a large fraction of what is called mental illness is nothing other than unusual preferences

This is the core of his “argument.”

Look, worship Caplan all you want, if that’s your preference. Build a shrine if you like. I’ve read the paper, pointed out things I thought were wrong, and read nothing but BS in response from you. So I’m done reading and responding to your nonsense.

Constant October 14, 2006 at 3:36 am

Most glaringly, a large fraction of what is called mental illness is nothing other than unusual preferences

This is the core of his “argument.”

He makes the same point, more fully, here:

“Building on psychiatrist Thomas Szasz’s philosophy of mind, the current paper argues that most mental illnesses are best modeled as extreme preferences, not constraining diseases.”

He is making a point about the economic analysis of mental illness. He is contradicting the claim that mental illnesses are best modelled as constraining diseases. That statement is perfectly understandable by anyone who is economically literate. And yet you wrote the following:

“There is nothing wrong with attacking orthodoxy, but understand it first.”

But the statement “mental illnesses are best modelled as constraining diseases” is perfectly understandable to someone with Caplan’s background. Yet you claim that Caplan fails to understand the orthodoxy that he contradicts. Well, if the orthodoxy is that mental illnesses are best modelled as constraining diseases, then you are wrong: that statement is perfectly understandable to any economist. What you might possibly mean without you being simply blatantly wrong, is that Caplan is wrong in imputing the statement (“mental illnesses are best modelled as constraining diseases”) to the psychiatric profession. I have conceded over and over that he may indeed be wrong about that – I have conceded, therefore, that he may not understand the orthodoxy. But what he does understand is the statement that he contradicts (that mental illnesses are best modelled as constraining diseases).

Look, worship Caplan all you want, if that’s your preference

Fallacy: attack on motivation. Just one of several in your arguments thus far.

Constant October 14, 2006 at 5:58 am

there is a difference between becoming mentally ill because you like that state

Uh, no. That misconceives the claim. The claim is not that we become mentally ill because we prefer to be mentally ill, the claim is that the state itself is a certain set of preferences. It’s as though you had said that people like ice cream because they like to like ice cream. No – they simply like ice cream. They didn’t start to like ice cream as a result of wanting to like ice cream. They just – like ice cream.

There’s nothing wrong with attacking Caplan’s arguments, but understand them first.

Furthermore, the whole issue of meta-preferences (wanting to change your preferences) is a red herring. Suppose that someone decides that he wants to lose weight. One approach may be for him to stop liking ice cream. So he may approach a doctor and say, “doctor, is there a procedure you can perform on me so that I stop liking ice cream and hamburgers and so on, because it would be a lot easier for me to eat a healthy diet if I didn’t like unhealthy food so much.”

Now: does that prove that the fact that he likes ice cream was all along not a matter of preference? No, it does not. So, having a meta-preference over a preference is no evidence that the preference wasn’t a preference to begin with.

Like I said, a red herring. I made the same point earlier when I wrote: “There are people who like to vegetate in front of the TV but who, in retrospect, wish they had done something productive with that time.” It doesn’t mean they don’t like to vegetate in front of the TV.

Isaac Crawford August 22, 2007 at 9:30 am

One of most visited pages is entitled “Demand Curves Slope Downwards” and it’s amazing how little there is on the net about the basics of this really important topic. I’d be interested in feedback on it. My page is here:
http://www.isaharr.com/ratchoice/demand/page9.html

Isaac

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