Tuesday, July 14, 2009

Keeping Animal Spirits Alive

(click on chart for larger view)

Greg Mankiw (emphasis mine):
This chart from Andrew Biggs "shows spending on veterinary care, which I pulled from the Consumer Expenditure Survey, and national health expenditures (for people) from the National Income and Product Accounts.... the rate of growth of spending from 1984 to 2006 wasn’t all that different—and in both cases, spending grew faster than the rate of economic growth. As new technologies are developed for humans, we adopt them for Bowser and Fifi—because we can afford to and we think it’s worth it."

These data are consistent with what I wrote a couple years ago: "The reason that we spend more [on healthcare] than our grandparents did is not waste, fraud and abuse, but advances in medical technology and growth in incomes. Science has consistently found new ways to extend and improve our lives. Wonderful as they are, they do not come cheap. Fortunately, our incomes are growing, and it makes sense to spend this growing prosperity on better health."

1 comment:

thinking said...

I'll agree advancing technology is is a major factor in rising spending in both medicine for humans as well as medicine for animals.

But Mankiw seems to want to downplay the huge inefficiencies in our health care system (for humans).

As Krugman and Wells wrote:
"This inefficiency is a bad thing in itself. What makes it literally fatal to thousands of Americans each year is that the inefficiency of our health care system exacerbates a second problem: our health care system often makes irrational choices, and rising costs exacerbate those irrationalities. Specifically, American health care tends to divide the population into insiders and outsiders."

And while Mankiw may take very good care of his own pet dog, he writes as if every pet is like Tobin or "Bowser" or "Fifi." In fact, if one considers the entire population of dogs and cats in the US, Mankiw may be surprised to know that many do not get good health care, and many meet some rather tragic ends.

Take any population of pet animal breed, and I would say you end up with a very stratified society, with a privileged few and most in disadvantage. Think of how many pet animals are euthanized every year, simply because no one will care for them. Think of how many pets have been abandoned during this recession, simply because their owners could not afford them any longer.

So Mankiw may have good health care for himself and his family, and he may be able to afford good health care for his dog, but he should not assume that this rosy situation exists for everyone else.

I would hope that Americans find a better way to structure our health care system, and aspire to do a little better with our future generations of humans than we do with dogs and cats.