• More Okun

    From Equality and Efficiency: The Big Tradeoff, by Arthur Okun:

    If society finds a way, with the same inputs, to turn out more of some products (and no less of others), it has scored an increase in efficiency.

    This concept of efficiency implies more is better, insofar as the “more” consists of items that people want to buy. In relying on the verdicts of consumers as indications of what they want, I, like other economists, accept people’s choices as reasonably rational expressions of what makes them better off. To be sure, by a different set of criteria, it is appropriate to ask skeptically whether people are made better off (and thus whether society really becomes more efficient) through the production of more whiskey, more cigarettes, and more big cars. Why do people want the things they buy? How are their choices influenced by education, advertising, and the like? Are there criteria by which welfare can be appraised that are superior to the observation of the choices people make?

    Since one can always select a criterion that implies A is “superior” to B and another that implies the opposite, the debate can never end. This all applies to health care, naturally.

    Unfortunately, Okun states in the very next sentence that he will not explore these issues. I’m sure the book is still worth reading, and so I’ll continue.

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