Normative Health Economics?
David Hume’s dictum of 1739, “One cannot
deduce an Ought from an Is,” has exerted a particularly strong
influence on the scientific discipline of economics. It has laid
the foundation of the distinction between “positive” and “normative” economics.
Though perhaps overstated in its absolute form – it is indeed
difficult to conceive an “Ought” that is not influenced
in some way by what “Is”, and there are reasons to assert
that many statements about “Ises” are subject to the
inductive fallacy, as we accept or reject them on the basis of reasoning
that itself reflects conventions and, therefore, judgments – Hume’s
fundamental premise remains that “Oughts” cannot be logically
derived from “Ises”.
facts, objective, descriptive, science,
“Ought”: normative, values, subjective, prescriptive,
(cf. Mark Blaug, 1992)
Hume’s dictum was echoed in 1904 by Max Weber’s doctrine of a value-free
social science (“Wertfreiheit”: “freedom from value[s]”)
and the subsequent disputes (“Werturteilsstreit”). Later,
in the 1960s, the positivist dispute (“Positivismusstreit”)
in German sociology again focused on the role of value judgments in social
In economics, a number of scholars tend to treat social welfare
theory as a “normative” science. As they turn to the
field of health economics, some of them are prepared to derive, from
this theory, “normative” statements on the efficient
organization of health service provision. This, of course, is perfectly
legitimate. It may, however, create distinct problems (and misunder-standings)
if and when theoretical foundations, limitations,
and implicit value judgments are not exposed.
For reasons closely related to the (implicit or explicit) value
judgments of social welfare theory, “extrawelfarism” has
emerged as a prevailing paradigm among health economists.
In practical terms, it represents a specific variant of utilitarian thought,
focused on health outcomes.
As they deviate from social welfare theory, extrawelfarists have
found themselves under attack from representatives of “pure” economic
theory. Without doubt, this fact has contributed to a widespread
perception that extrawelfarism does appropriately address egalitarian
concerns that have been raised against the “normative” interpretation
for welfare theory. This may be not quite correct.
In any event, health economists often present their findings in
a way non-economists – such as policy makers, physicians, patients,
the public, and other groups of stakeholders – can only (mis)understand
as “normative”. This may be the case for a number of
reasons, including the need to simplify due to time constraints imposed
on speeches and presentations, not allowing to explain critical value-loaded
assumptions underlying an analysis. Sometimes, however, a normative
interpretation of analyses is implied in a seemingly innocuous way,
for instance by calling for more “consistency” in the
implementation of the results of economic analyses. And on occasion,
some economists do claim explicitly that their recommendations should
be understood as prescriptive.
To be sure: there is no substitute to economic analysis if and when
the opportunity cost of any resource allocation, including the delivery
of health care, is a concern. Thus health economic evaluations will
play an increasingly important role. They will continue to provide
crucial, and sometimes counterintuitive, insights into the trade-offs
inevitably associated with any health care policy. The critical point
merely is that the results of these evaluations will have to be interpreted
with the assumptions and the methods employed in mind, and, as a
result, may have to be moderated by values outside their scope.
These issues surrounding the scope of health economic analyses are
addressed in more detail in the following paper (written in German):
Gibt es einen normativen Anspruch
In: Hermes A. Kick, Jochen Taupitz (Eds.): Gesundheitswesen zwischen
Wirtschaftlichkeit und Menschlichkeit, Münster: LIT-Verlag
2005, pp. 37-112.
This subject was also addressed at the 5th World Congress of the
International Health Economics Association (iHEA) in Barcelona, Spain,
on July 13, 2005:
evaluation of medical interventions: answering questions people are
unwilling to ask?
Book of Abstracts, pp. 354-355
On a Less Serious Note
Here are some popular jokes:
… about economists …
Curt Monash once reported: “I was standing with Ken Arrow
by a bank of elevators on the ground floor of William James Hall
at Harvard. Three elevators passed us on our way to the basement.
I foolishly said ‘I wonder why everybody in the basement wants
to go upstairs.’ He responded, almost instantly: ‘You’re
confusing supply with demand.’”
Q: How many Chicago School economists does it take to change a light
A: None. If the light bulb needed changing the market would have already done
Q: How many mainstream economists does it take to change a light
A: Irrelevant – the light bulb’s preferences are to be taken as
Q: How many central bank economists does it take to screw in a light
A: Just one – he holds the light bulb and the whole earth revolves around
… about physicians …
Q: How many doctors does it take to change a light bulb?
A: That depends on whether it has health insurance.
Q: Hoy many surgeons does it take to change a light bulb?
A: None. They would wait for a suitable donor and do a filament transplant.
Q: How many veterinarians does it take to change a light bulb?
A: Three. One to change the bulb and two more to complain that an M.D. makes
ten times as much for the same procedure.
… about psychiatrists …
Q: How many psychiatrists does it take to change a light bulb?
A1: One, but he must consult the DSM-IV.
A2: Why does the light bulb necessarily have to change?
A3: How long have you been having this fantasy?
… about psychologists …
Q: How many psychologists does it take to change a light bulb?
A1: None. The light bulb will change itself when it’s ready.
A2: Just one, but the light bulb really has to want to change.
A3: Just one, but it takes nine visits.
… about students of psychology …
Who was Right: Pavlov or Freud?
Unbeknownst to most students of psychology, Pavlov’s first
experiment was to ring a bell and cause his dog to attack Freud’s
From Gary Larson, The
Far Side (1990).
… about real-life ethics …
Towards a General Theory of Justice
“As far as I’m concerned, they can do what they
want with the minimum wage, just as long as they keep their hands
off the maximum wage.”
… about managers …
Managerial Decision-Making: Science or Art?
“Your background in creative decision-making is interesting,
but we’re looking for someone with a strong background in
creative order following.”
Wall Street Journal.
…and, perhaps inevitably, about health economists …
“The drug itself has no side effects – but the number
of health economists needed to prove its value may cause dizziness
Unknown source. This is one of the oldest cartoons
circulating among health economists.
… and about health care analysts:
“It may well bring about immortality – but it will
take forever to test it.”
Unknown source – I found this cartoon
in a presentation by Martin