Dr. Harold Winter, Professor of Economics, wrote an article on the costs of prevention vs. cure, “When Peace of Mind Hits You in the Wallet,” on the Resolved website on Feb. 15.
These days we have a near-mad obsession with prevention. Think of all the money we sink into our personal well-being and healthcare costs in hopes of thwarting disease. After all, doesn’t it usually cost more to fix what’s broken rather than preventing it getting broken in the first place? Paying to be proactive about our health seems like a sound idea, a good investment. Right?
No, that assumption may be completely wrong.
Let’s say you can undergo a preventive health screening test that costs $1,000. If the test successfully allows you to avoid a costly treatment procedure of $10,000, in this case the prevention seems well worth the cure. However, consider what happens if you don’t take the test.
Illness does not occur with 100% certainty, but instead with some probability – often far less than that. Let’s say we are talking about an illness that affects 5 out of every 100 people. If 100 people take the screening test, the cost of prevention in the aggregate will be $100,000. Without the test, if 5 people ultimately need the treatment, the cost of cure in the aggregate will be $50,000. In this example, prevention is not worth the cure; it is twice as costly….
In the end, it comes down to a simple public policy question: Should our health policy officials promote prevention over cure? Prevention may seem like common sense when it is a good deal. But when it’s a bad deal, encouraging prevention may actually make society poorer. The USPSTF understood that logic, and is still under fire for acting upon it.
Winter has authored a number of books on the economics of public policy, including Trade-Offs: An Introduction to Economic Reasoning and Social Issues (Second edition, 2013, University of Chicago Press) and The Economics of Excess: Addiction, Indulgence, and Social Policy (2011, Stanford University Press).
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