From the CBO Director: The Psychology of Health Care Costs

By September 19, 2008General

CBO Director Peter R. Orszag does a nice job using the budget office’s blog site for updates about his presentations, speeches, testimony, etc. (Although…Director Orszag, put your name on the home page! It’ll help the spelling-challenged.) This post, “Lecture on health care policy at Stanford,” pointed to a very interesting talk at the Center for Health Policy and the Center for Primary Care and Outcomes Research at Stanford University, with lots of discussion of the causes of rising health care costs.

My remarks touched upon a theme that I will be discussing in more detail in other lectures later this fall: that just as the field of economics suffered because it mostly ignored psychology for too long, so too much of medical science and health policy has been largely ignoring the crucial role of expectations, beliefs, and norms. Perhaps the most compelling example involves the placebo effect, which tends to be dismissed as a statistical annoyance rather than examined in and of itself as a powerful force — often more potent empirically than the ‘medical’ intervention formally being studied.

Orszag’s slides are here .

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