4 ms·

I think he hasn’t sufficiently explained the curvature in this graph: https://i2.wp.com/randomcriticalanalysis.com/wp-content/uploads/2018/10/screenshot_3405.p

• rcafdm 7y ago
  1, I can fit the US on a linear trend amongst high income countries. 2, there’s no necessary reason why increasing health share with rising real income is unsustainable. We can and have increased share spent on health while increasing real expenditures across the board. 3. I touch on some reasons why this may curve up and then eventually flatten out. 4. No, not everything fits on log-log slopes and us is very close to the trend. https://randomcriticalanalysis.com/2019/12/03/no-means-no-the-high-income-elasticity-of-health-expenditure-does-not-mean-we-are-going-to-starve/ https://randomcriticalanalysis.com/2019/12/03/no-means-no-th...
  • scythe 7y ago
    1. You didn’t. 2. Asymptotic growth towards 100% certainly sounds unsustainable. 3. You mention Baumol’s cost disease and the proportion of income spent on services, which is not so bad. 4. Log-log overfitting is a well-known phenomenon and a low deviation (particularly at the edge of the graph) doesn’t make it go away. 5. This claim, tucked between historical spending and nurse salaries, underpins much of the thesis, but is curiously unsubstantiated: >Nor do we tend to find results consistent with this in wages, profits, and other proxies for (or presumed causes of) such issues in these sectors. On the contrary, the reliable statistics for healthcare (at least) shows prices have fallen relative to average nominal income and that most of the increase is therefore explained by rising real consumption (quantities per capita). Healthcare prices are kind of the whole point here. The lower third of this country can’t afford essential care. Not only that, but we’ve seen the prices, and they’re ridiculous. So if you have data about healthcare prices not being out of order, that seems a lot more relevant— and less cherry-picked — than the history of household spending on food consumption.
    • rcafdm 7y ago
      > 1. You didn’t. https://i0.wp.com/randomcriticalanalysis.com/wp-content/uploads/2019/11/rcafdm_oecd_income_health_elasticity_2017.png https://i0.wp.com/randomcriticalanalysis.com/wp-content/uplo... > 2. Asymptotic growth towards 100% certainly sounds unsustainable. "Sounds" isn't an argument and I'm explicitly arguing the slope is likely to flatten, eventually. The point the income elasticity of health expenditure can be (is) well north of one and we can (and do) consume more of everything else at the same time. https://randomcriticalanalysis.com/2019/12/03/no-means-no-the-high-income-elasticity-of-health-expenditure-does-not-mean-we-are-going-to-starve/ https://randomcriticalanalysis.com/2019/12/03/no-means-no-th... > Log-log overfitting That isn't a thing. You can argue this specification minimizes the residuals at the high end if you want, but it's very likely to the correct modeling decision, it's bog standard in economics, and the US residual ~= 0 (certainly not notably high). It's also pretty obvious health expenditures are increasing in % terms and that failing to log-transform results in particularly poor model performance with constant slope out of sample. https://i0.wp.com/randomcriticalanalysis.com/wp-content/uploads/2017/04/nhe_aic_slope_comps_1970_2015.png https://i0.wp.com/randomcriticalanalysis.com/wp-content/uplo... > So if you have data about healthcare prices not being out of order, that seems a lot more relevant https://randomcriticalanalysis.com/2018/01/06/its-not-the-prices-stupid-a-response-to-austin-frakts-and-aaron-carrolls-nytimes-article/ https://randomcriticalanalysis.com/2018/01/06/its-not-the-pr... https://randomcriticalanalysis.com/2017/07/27/health-care-prices-do-not-play-the-role-most-believe/ https://randomcriticalanalysis.com/2017/07/27/health-care-pr... > The lower third of this country can’t afford essential care. The lower third of the country consumes approximately the same amount of care as the rich, as in other high-income countries, and the socioeconomic gaps in other countries are likely comparable to even larger (depending on how measured). https://randomcriticalanalysis.com/2017/04/15/some-useful-data-on-the-dispersion-characteristics-of-us-health-expenditures/ https://randomcriticalanalysis.com/2017/04/15/some-useful-da... https://twitter.com/RCAFDM/status/1203715358152167424 https://twitter.com/RCAFDM/status/1203715358152167424 To the extent there are real and ultimately consequential issues with affordability for some small segment of our population, these aren't likely to be explained by aggregate costs or prices so much as by narrow details that we can tweak, i.e., without requiring massive change, should the political desire exist to do so. > seems a lot more relevant— and less cherry-picked — than the history of household spending on food consumption. Pardon me, but I was engaging with someone that was arguing this expenditure growth implied starvation and you're making very similar (wrong) arguments. Whether you appreciate it or not, the role of general increases in productivity, the source of real income growth in the long run, and differences in the rate of productivity growth in different sectors, which we are clearly reflected in prices, is very much on point. Food production is simply a way to make this concrete for people that struggle with abstractions like price indexes and relative prices.