18 Dec 08
Originally posted by KazetNagorraTypically a free rider problem occurs when it is impossible (or too costly) to make users pay. In this case, a rich individual free rides because there is no way to make the rich contribute to the public good (social externalities from a healthier poor). The way to resolve this (if one thinks that it should be resolved) is universal membership so that every rich person is forced to pay.
Actually, these 90 posts serve to illustrate why "user pays" results in free riders.
This is I believe what you have been saying throughout the thread.
18 Dec 08
Originally posted by telerionYes.
Typically a free rider problem occurs when it is impossible (or too costly) to make users pay. In this case, a rich individual free rides because there is no way to make the rich contribute to the public good (social externalities from a healthier poor). The way to resolve this (if one thinks that it should be resolved) is universal membership so that eve ...[text shortened]... h person is forced to pay.
This is I believe what you have been saying throughout the thread.
18 Dec 08
Originally posted by telerionHealth care is excludable. Defense of universal health care can be done on many grounds, but I really don't think free-riding is one of them. I find it absurd to think the problem here is coordinating towards everybody contributing. Many wealthy would obviously be worse-off, unless there are extremely large efficiency gains from centralization. It's much less about coordination, than it is about redistribution.
Typically a free rider problem occurs when it is impossible (or too costly) to make users pay. In this case, a rich individual free rides because there is no way to make the rich contribute to the public good (social externalities from a healthier poor). The way to resolve this (if one thinks that it should be resolved) is universal membership so that eve ...[text shortened]... h person is forced to pay.
This is I believe what you have been saying throughout the thread.
18 Dec 08
Originally posted by PalynkaSo where is the gap in my reasoning? The wealthy don't profit from lower crime, better democracy and higher productivity?
Health care is excludable. Defense of universal health care can be done on many grounds, but I really don't think free-riding is one of them. I find it absurd to think the problem here is coordinating towards everybody contributing. Many wealthy would obviously be worse-off, unless there are extremely large efficiency gains from centralization. It's much less about coordination, than it is about redistribution.
18 Dec 08
Originally posted by spruce112358It appears that the original presumption is guilt of the accused. It is from this standpoint that plea bargain deals are given. In general, police and prosecutors will offer the deal to only the lesser guilty party in order to secure a conviction of the more guilty or dangerous perp.
I thinking betrayal does give the best outcome for the collective. But it certainly does not lead to the best outcome possible for the individuals.
Can the paradox be solved by adding in the question of guilt or innocence?
Let's say that if someone is guilty, they won't talk, but if someone is innocent, they will.
So if both are guilty - neithe ...[text shortened]... of the same crime? Still, I suppose it has happened -- and I'd be real bitter if it was me!
The scenario being used as analagous to government in general doesn't quite fit. As for example relating it paying taxes.
A fair and equitable tax structure, which treats all participants equally, and which pays for things that benefit all (general welfare) as opposed to benefits directed at specific factions, or constituency groups, usually wouldn't require either the force or fraud required by unequal, confiscatory, and redistributionist policy.
Why would the prisoner rat each other out, when if they trusted the honesty and fairness of the system and they were innocent, they both would go free? That outcome is best for the individual and society.
18 Dec 08
Originally posted by KazetNagorraDo they? One has better bargaining power if the outside option of the other party is worse. Bigger cake? Certainly. Bigger partition? Probably not.
So where is the gap in my reasoning? The wealthy don't profit from lower crime, better democracy and higher productivity?
18 Dec 08
1 edit
Originally posted by PalynkaI too think the setup is strange. Perhaps I'm mistaken, but it is my understanding that KN's setup does not have "everyone contributes" as an equilibrium.
Health care is excludable. Defense of universal health care can be done on many grounds, but I really don't think free-riding is one of them. I find it absurd to think the problem here is coordinating towards everybody contributing. Many wealthy would obviously be worse-off, unless there are extremely large efficiency gains from centralization. It's much less about coordination, than it is about redistribution.
In response to KN's question: it's about the marginal benefit of contributing. The rich do reap the benefits from any social externalities due to a healthier poor, but on the margin they can probably find other uses for their next dollar that bring them even more benefit.
There are a lot of issues with healthcare that can cause a competitive market to fail to deliver the first best allocation. The biggest one of the top of my head is that it almost certainly features "adverse selection" because health information is private, that is to a certain extent unobservable. To the extent that people with high health risk can pose a low health risk types, they will pool together. The frequency of claims within the pool goes up and the insurance company has to raise the premium. This induces the actual low health risk types to leave the pool so that the average health risk within the pool goes up even more. The premium must rise and so on.
With universal health care, the healthy types are restricted from leaving the pool. It's a bummer for them because they pay a higher premium than is actuarially fair, but as a group consumers may be better off on net.