LiU Working Papers in Economics,
Linköping University, Division of Economics, Department of Management and Engineering

Abstract: Rationing decisions based on health maximization are likely to conflict with the view of the general public. We argue that health economics at large has been oblivious to the core aspects of human nature and this has limited the use of health economics as a productive input in health policy. We present a psychological account for why the outcomes of health economic evaluations are unlikely to be compatible with public views and discuss implications for health policy. This psychological account emphasizes the occurrence of taboo-tradeoffs and compassion fade, two emotional phenomena that are especially likely to bias judgments about health care priority setting. Health economics as a tool for priority setting is also very much blind for the needs of the individual since it has an impersonal focus which gives little or no concern for individual needs. Given the disconnect for how people think and make decisions about the individual versus how people think and make decisions about aggregated groups this further helps to explain why people hate health economics.

Keywords: Health Economics; Medical Decision Making; Health Care Priority Setting; Emotions; Psychology

JEL-codes: I19

12 pages, June 20, 2018

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