Tuesday, March 6, 2012

Economic Incentives to Combat Disease

Peter S. K. Lynch

While research and development aimed understanding, treating, and preventing disease is making progress at an ever-increasing rate, growth can be increased through grants from the government.

There are two major factors contributing to our attempts to eradicate disease: economic profit and altruism (pure or otherwise). As such, progress can be made by either increasing the relevant institutions’ potential for economic profit or by increasing the altruism of those participating (in terms of the goals of the institutions themselves and the individuals associated with them). Altruism can be increased through changing the worldviews held by those involved but, while there is potential for improvement in this area, progress is limited in large part because individual people almost universally haven’t reached their maximum capacity for contribution until we are adults, at which point our worldviews have been formulated and developed to such a degree that changing them would rely almost entirely on educational efforts. While changes in educational systems can still contribute to changing worldviews in favor of altruism and should certainly be used, it seems that creating economic incentives for the institutions and individuals involved would be a valuable means by which to contribute to disease-fighting efforts.

I propose that government grants can be used as a powerful tool to these ends, and that providing these incentives would constitute a trivial cost for the government when compared to its total budget. And, in any event, providing such incentives would require only minor changes with respect to the distribution of its budget and could even involve simply re-allocating some current healthcare expenditures. Additionally, the creation of powerful incentives would require very little legislative effort. I will now briefly outline one such incentive:

Institutions and the individuals comprising them will put more effort into fighting disease when each contributor sees the prospect of economic gain and, if the government increases competition, progress will occur at an increasing rate. Allocating $10 billion dollars for these grants—while to individuals this may seem like a lot of money, but it pales in comparison to America’s overall budget—to, say, the ten most valuable contributors (deciding how this will be measured will require further attention) each year, would provide a powerful incentive. As an example, our government could give out grants of $1 billion to each of the 10 companies it deems to have made the most progress in the last year. Each company would jump at the opportunity to secure these grants and, it must be noted, the winners of these grants would have more capacity for further contributions to disease-fighting efforts, creating the potential for a positive feedback loop.

I mentioned that providing this kind of funding wouldn’t require much legislative effort. This is because both Democrats and Republicans would want to create these grants as, the public would obviously benefit from increased disease fighting efforts and, as such, would ameliorate, to a certain degree, the public’s political unrest (in case you’re cynical about the intentions of our legislators, bear in mind that they would realize that such an effort would increase their chances of re-election).

The biggest remaining problem would be deciding not on whether grants should be created but, rather, how much money these grants should be worth and how many institutions will earn them. The public would also create pressure to have these changes go into effect as soon as possible, so the two parties would come to an agreement quickly, making the increase in progress begin almost immediately. And, consequentially, the quality of our healthcare would increase while, at the same time, reducing its cost.It amazes me that this kind of incentive for progress isn’t used by our government to a greater degree than it currently is.

As an extension of all this, I believe that applying this kind of incentive should be used in a broad range of other causes, in order to affect change. I’m amazed that we do this as infrequently as we do, and I know that we must use this tactic more frequently, across a wide variety of fields and pursuits.

No comments:

Post a Comment