In Memoriam of Thomas Schelling

Thomas Schelling: Game Theory, Cold War, Coordination, Leadership, Tipping, Focal point...

Eleven years ago, Thomas Schelling was awarded with the Nobel Prize, 4 days ago he died. It is not often that one man has such a profound impact on the world and the field of public policy. In this blog I have devoted some posts to him: Statistical life vs. identifiable life, Els pirates dels medicaments s'escapoleixen, Validesa i utilitat de les proves genòmiques.  Basically, all of them were related to his main contribution: The Strategy of conflict, a must read book for all people interested in negotiation. Today, the best thing you can do is to read Josep M. Colomer and his post on Schelling, it fits perfectly with his contribution and message, excellent post.

 Cubism and war. Picasso Museum exhibition in Barcelona

Validesa i utilitat de les proves genòmiques

Genome-Based Diagnostics: Clarifying Pathways to Clinical Use: Workshop Summary

En teoria de jocs es diu que tenim un punt focal quan trobem una solució que la gent tendeix a utilitzar per coordinar-se quan falta comunicació, perquè sembla que satisfà tothom. El concepte va ser introduït per l'economista guanyador del Premi Nobel Thomas Schelling en el llibre The Strategy of Conflict (1960). El que aquest punt focal o equilibri sigui eficient o no ho sigui ja són figues d'un altre paner..
Tot d'una, quan llegia un l'informe de l'IOM sobre tests genètics, m'ha vingut a la memòria Schelling i els seus punts focals. Resulta que s'explica com davant dels biomarcadors s'ha encetat un cercle viciós (punt focal) que només es pot trencar mitjançant un canvi regulatori i d'incentius. Afegeixo un paràgraf d'interès:

The basic problem is that there has been relatively little consistency regarding which biomarkers have been introduced into clinical practice. Very few cancer biomarkers with demonstrated clinical utility have been introduced over the past 30 years. Even among those tests that have been integrated into practice, their use in certain settings has not always been supported by evidence of benefit, such as the use of prostate-specific antigen (PSA) as a screening test (Andriole et al., 2009), said Hayes. This has helped to create what Hayes has termed a “vicious cycle” in which tumor biomarkers are systematically undervalued (Figure 2-1). This undervaluation has led to limited use of these diagnostics by health care providers and poor reimbursement when a marker has been able to navigate the regulatory environment to be brought to market. Lack of use and reimbursement in turn leads to limited funding for biomarker research because the return on investment is low. The perception that markers have little utility has also led to an environment of lower academic  recognition for developing biomarker-based tests. The overall result is reduced ability and incentive to conduct properly designed clinical trials to generate high-quality evidence of clinical utility. In return, there is reduced data certainty, higher skepticism, and few recommendations for clinical use, said Hayes, which completes the cycle by contributing to the poor valuation of marker utility. Hayes focused his recommendations for breaking the “vicious cycle” of undervalued tumor biomarkers on two areas: the regulatory environment and marker reimbursement.

Actualment als USA (i aquí encara menys) no hi ha un procés de revisió de la FDA per a les proves diagnòstiques de laboratori del tipus Laboratory Developed Tests LDT on s'avaluï la validesa analítica, validesa clínica i utilitat clínica. Es regula per la llei CLIA tal com s'explica al text. La proposta és doncs que la FDA prengui part del procés de revisió i es reformuli la regulació existent. I des de la vessant dels incentius, se suggereix que s'estableixin anàlisis cost-efectivitat de les proves que permetin situar el seu preu en funció del valor que aporten.
Ens trobem doncs en un llibre clau per a un moment clau. I qui tingui ulls i vulgui que el llegeixi, són tant sols 105 pàgines fonamentals per entendre una de les qüestions determinants de la medicina del futur.
Em costa admetre que el punt focal per aquí aprop es redueixi a veure passar els dies inexorablement i la innovació tecnològica resti sense avaluar, un equilibri ineficient. En Schelling diria que cal comprometre's de forma creïble per sortir-ne, però per ara i pel que fa al regulador, no ho sé veure per enlloc.

PS. Miss-selling drugs, a The Economist.

PS. La sindicatura emet informe sobre l'Hospital Clínic. Enmig del desori observo que s'han deixat de cobrar 40 milions d'euros amb trasplantaments a forasters!

PS. A DM trobareu alguns detalls sobre el nou sistema de pagament.  Esperem més informació en el futur.

PS. Les autopistes sense cotxes ens constaran 290 milions el 2012, l'any passat van costar 80 milions.

The dark side, the conflict option

The dark side of the force

While reading today FM Alvaro op-ed on current war: Questions in a war, I thought that was good to remember Jack Hirshleifer and specifically to retrieve an excellent speech he gave in 1993: The dark side of the force. When I read it for the first time I got impressed and I've remembered forever.
Therefore, my suggestion is to read the whole speech. If you are an economist, you'll be shaken by his views. Selected statements:

“Our profession has on the whole taken not too harsh but rather too benign a view of the human enterprise. Recognizing the force of self-interest, the mainline Marshallian tradition has nevertheless almost entirely overlooked what I will call the dark side of the force—to wit, crime, war, and politics."

“cooperation, with a few obvious exceptions, occurs only in the shadow of conflict.”  “when people cooperate, it is generally a conspiracy for aggression against others (or, at least, is a response to such aggression).”

"Pareto is saying, sure, you can produce goods for the purpose of mutually beneficial exchange with  other parties—OK, that's Marshall's "ordinary business." But there's another way to get rich: you can  grab goods that someone else has produced. Appropriating, grabbing, confiscating what you want— and, on the flip side, defending, protecting, sequestering what you already have—that's economic  activity too. Take television. Cops chase robbers, victims are stalked by hitmen (or should I say  hitpersons?), posses cut off rustlers at the pass, plaintiffs sue defendants, exorcists cast spells against  vampires. What is all this but muscular economics? Robbers, rustlers, hitpersons, litigants—they're all trying to make a living. Even vampires are making economic choices: sucking blood is presumably the cost-effective way of meeting their unusual nutritional needs.”

“This is Machiavelli's version of the golden rule: he who gets to rule, will get the gold. Human history is a record of the tension between the way of Niccolo Machiavelli and what might be called the way of Ronald Coase. According to Coase's Theorem, people will never pass up an opportunity to cooperate by means of mutually advantageous exchange. What might be called Machiavelli’s Theorem states that no one will ever pass up an opportunity to gain a one-sided advantage by exploiting another party.
Machiavelli's Theorem standing alone is only a partial truth, but so is Coase's Theorem standing alone. Our textbooks need to deal with both modes of economic activity. They should be saying that decision-makers will strike an optimal balance between the way of Coase and the way of Machiavelli—between the way of production combined with mutually advantageous exchange, and the dark-side way of confiscation, exploitation, and conflict.”

"Thus, in recognizing the role of conflict we must not go overboard in the other direction. All aspects of human life are responses not to conflict alone, but to the interaction of the two great life-strategy  options: on the one hand production and exchange, on the other hand appropriation and defense against  appropriation. Economics has done a great job in dealing with the way of Ronald Coase; what we need  now is an equally subtle and structured analysis of the dark side: the way of Niccolo Machiavelli.”

The balance between these modes of economic activity--the one leading to greater aggregate wealth, and the other to conflict over who gets the wealth--provides the main story line of human history.

This speech and several articles on conflict were published in a book  "The Dark Side of the Force: Economic Foundations of Conflict Theory".
Hirshleifer analytic frame may be applied to health economics as well, specifically to such cases where fraud, inappropriateness, and false advertising are part of the dark force.




PS. Long time ago I quoted in a post the Schelling book on the same topic.

Statistical vs. identifiable lives

Do We Really Value Identified Lives More Highly Than Statistical Lives?

The recent Ebola evacuated case exemplifies the concept created by Shelling a long time ago, the difference of how a society allocates resources according to 2 different rules:

In 1968, in a paper about valuing ways to reduce the risk of death, Thomas Schelling1 distinguished between “identified lives” and “statistical lives.” Identified lives are the miners trapped in a mine or the child with a terminal disease—specific people who need help now. Statistical lives are those people, unidentifiable before the fact and often after as well, who will be saved by a new safety regulation, public health program, or environmental standard. Schelling observed that people seem to be willing to pay more to save an identified life: “Let a six-year-old girl with brown hair need thousands of dollars for an operation that will prolong her life until Christmas, and the post office will be swamped with nickels and dimes to save her. But let it be reported that without a sales tax the hospital facilities of Massachusetts will deteriorate and cause a barely perceptible increase in preventable deaths—not many will drop a tear or reach for their checkbooks.

Really such a case goes beyond Shelling insight because of uncertainty and unavailability of effective treatment. Bioethics field has argued over what they called "rule of rescue", a different perspective of the same issue. In this respect, NICE statement helps to understand both views:

When there are limited resources for healthcare, applying the ‘rule of rescue’ may mean that other people will not be able to have the care or treatment they need. NICE recognises that when it is making its decisions it should consider the needs of present and future patients of the NHS who are anonymous and who do not necessarily have people to argue their case on their behalf. NICE considers that the principles provided in this document are appropriate to resolve the tension between the needs of an individual patient and the needs of present and future users of the NHS. The Institute has not therefore adopted an additional ‘rule of rescue.

The article by Louise B. Rusell reflects precisely the theoretical and practical controversy and ends with this paragraph:

Adjustments and controversies aside, the evidence provided by VSL estimates suggests that people’s willingness to pay for statistical lives may be consistent with their willingness to pay for identified lives. The apparent existence of 2 different decision rules may have been no more than an artifact of the economic method for valuing statistical lives in use at the time the distinction was proposed. Now that economists’ methods more fully reflect “the interests, preferences and attitudes to risk of those who are likely to be affected by the decisions,” their estimates of the value of a statistical life support the idea that there just may be a single rule: Identified and unidentified lives may be equally valuable. This is good news for decision makers who use cost-benefit and cost-effectiveness analysis to inform decisions.

The theoretical suggestion sounds good, nowadays the political decision making reality goes in the opposite way, at least close.

PS. A must read post on GCS blog about the same topic.

PS. Ebolanomics, the economics of ebola at the New Yorker. Nothing new, prizes instead of patents to promote R&D, a good idea with difficult implementation.

PS. How much would you pay for a quality adjusted life year?

Walt  Khun.  From Tita Cervera  St. Feliu exhibition

The end of marginal revolution

Richard Thaler was awarded with the Nobel Prize some days ago. If you follow this blog you'll know his works on behavioral economics and nudging. Since many years I've been interested in this perspective, though it has still more to deliver.
Today I would suggest you to read JM Colomer blog. He has written an excellent post on him and its impact on economic science. Selected statements:

Marginalist microeconomics held that we could understand collective outcomes by assuming that they derive from free interactions among homines economici.
A first big counter-revolution was the reintroduction of institutions in the basic analysis, especially since the 1980 and 1990s (including by Nobel laureates related to the social choice and public choice schools such as Kenneth Arrow, James Buchanan, Ronald Coase, Douglass North, Amartya Sen, Thomas Schelling, Leonid Hurwicz, Roger Myerson, political scientist Elinor Ostrom, Oliver Williamson, and others).

The second is the reintroduction of realistic observations about people’s motivations and behavior, including emotions. This has been based on psychology, on the background of huge progress in neuroscience (while pioneers include political scientist Herbert Simon and psychologist Daniel Kahneman). That Richard Thaler professes at the University of Chicago, once the temple of the neoclassical school, shows the depth of the change.

Now we know again that the three pillars of social analysis are, together with people’s calculated self-interested choices, emotions and institutions, as Hume and Smith masterfully had already established.

And this is the return to the roots of economics with a new toolkit.

Parov Stelar

Els pirates dels medicaments s'escapoleixen

Mentre aquí parlem de la llista de Sinde i l'instigador govern Obama atura la seva, els pirates dels medicaments segueixen de festa i el regulador de vacances. El mercat creix i els països no es posen d'acord per limitar el seu territori. Fins ara semblava que estaven lluny, però ara ja s'acosten perillosament. Els medicaments confiscats a les fronteres europees entre 2006 i 2009 assoleixen la xifra 7,5 milions d'envasos. L'estadística diu que només durant el 2010 van ser 3,2 milions. No puc imaginar el que això representa com atemptat a la salut pública, es diu per l'OMS que l'1% dels medicaments als països desenvolupats són falsos però això com tot va per barris i ningú pot certificar amb certesa aquesta xifra. Des del WSJ alerten amb tot detall de la negativa dels fabricants de genèrics europeus al control d'importacions de matèries primeres i traçabilitat dels productes, i jo em pregunto: tenen alguna cosa per amagar?.
Els ciutadans han de saber doncs, que si ens creiem el que diu WSJ, els primers que estan posant pals a les rodes de la regulació per evitar la pirateria són els subministradors del 60% dels medicaments que tots plegats prenem. Què està passant?

PS. Podeu també consultar la seva proposta que precisament no té en compte el control de matèries primeres que ara demana la UE.

PS. Permeteu-me avui felicitar sincerament a la Beatriz González López-Valcárcel, i malgrat el retard en fer-ho, dir-vos que la gran creu de l'ordre civil de la sanitat és tant sols una anècdota en una trajectòria exemplar de docència i recerca en economia de la salut. A aquesta entrevista trobareu detalls.

PS. Avui a LV, article clar de resposta del President Pujol a un op-ed desenfocat que us vaig evitar de llegir.

PS. Arriba la medicina de caixa negra al nostre entorn, aneu amb compte. Noves proves diagnòstiques sense explicar el valor predictiu, ni sensibilitat ni especificitat a la pràctica, es diu tant sols "no disponible". S'aplica el raonament invers, fixen el màxim de falsos negatius (10%) i troben la combinació òptima de gens per satisfer suposadament la restricció, cap contrast a la pràctica. Mentrestant la caixa negra està segellada i la desconeixem. Ho aprova la FDA i es comercialitza a Europa quan el regulador segueix de vacances. El preu de venda a Catalunya s'acosta a 2.675 € i just ara ha començat la campanya comercial, sentireu soroll per tal d'incorporar-ho a la cartera (de prestacions pública). I si voleu veure una suposada anàlisi cost-efectivitat esbiaixada de dalt a baix finançada pel fabricant la trobareu aquí. És un bon exemple d'allò pel que no ha nascut l'economia de la salut. Una tasca que un pot estalviar-se de fer i així no confondrà l'audiència. Per cert, en un altre ordre de coses, si el regulador no es trobés de vacances podria mirar-se el decret que va fer i l'apartat 23.2a i aquí m'aturo.

PS. Vaig escriure fa dos anys aquest article a Correo Farmacéutico i com que potser no el vau veure, aquí el torno a posar on hi ha els detalls del que s'ha de fer quan més aviat millor.  

Davant el repte dels medicaments falsos
L'autor denuncia la necessitat de fer front a la creixent aparició de medicaments falsificats i demana una estratègia comuna entre els països per aturar el problema.
El mercat d'escriptors fantasma d'articles científics existeix i l'oferta s'ha desenvolupat en els últims anys perquè hi ha hagut demanda. El codi ètic de la indústria farmacèutica nord-americana prohibeix aquesta pràctica des de setembre, després d'anys de controvèrsia que va arribar al seu punt més àlgid amb el cas Vioxx. El resultat és conegut: alguns articles publicats oferien conclusions esbiaixades i algunes publicacions han hagut de rebutjar resultats fins i tot després de publicats.L'editorial de The Lancet de 9 de gener mostra a més la decepció sobre la magnitud del nivell de frau en la investigació procedent de la Xina. L'impacte no és només en termes reputacionals, sinó que ofereix senyals equivocades per a investigacions posteriors així com dany potencial. De la mateixa manera que ha crescut el frau en la ciència, estem enfrontats a una major capacitat de falsificació de medicaments. Per al cas espanyol, el gener de 2009 la premsa va informar que en els dos mesos anteriors s'havien interceptat a Espanya gairebé un milió de medicaments falsificats procedents de fora de la UE.Els països de procedència eren fonamentalment Rússia, la Xina o Corea del Sud. A la Xina, les multes per falsificar estan entre 15 i 580 dòlars. Podem imaginar que, considerant els beneficis potencials, aquestes multes no dissuadeixen els malfactors. La gravetat de la situació és coneguda, i en especial en els països en desenvolupament. No obstant això, la capacitat per donar una resposta global es dilata en el temps. El pacte que va proposar la UE el 2008 està lluny de tenir una traducció pràctica.Les mesures d'autenticació a la cadena de distribució requereixen una homologació de la legislació internacional. A més, al meu entendre, convé fixar costos de falsificar grans que dissuadeixin a priori d'aquesta activitat. Mentre les lleis penals de cada país tinguin nivells de multes o penes excessivament baixos, el potencial de falsificació es mantindrà. Els danys per a la salut són excessius i justificarien una acció decidida i coordinada dels governs per atenuar la situació. 

Un impuls en forma d'estratègia

La proposta de directiva europea ja té més d'un any i la presidència espanyola de la UE pot donar un impuls. L'objectiu està traçat, ara falta el consens perquè la directiva surti endavant. La dificultat és que una directiva europea és insuficient. La necessitat d'impulsar una estratègia que abasti els països productors de fàrmacs falsos és fonamental.L'OMS està tractant d'impulsar aquest esforç en els últims anys amb resultat desigual. Intueixo que l'abast del problema no és només sanitari i requereix una major implicació. L'ONU també ha tractat la qüestió des de fa anys, però la resposta dels països productors és insuficient. Vist així, cal preguntar quines serien les amenaces creïbles a establir respecte a països que originen el comerç de medicaments falsos. Hi ha experiències en altres ordres de la política internacional que han donat efecte i els experts haurien de valorar acuradament.Thomas Schelling, en el seu llibre L'estratègia del conflicte, pot donar suggeriments en aquest sentit. Si només esperem consens potser ho aconseguim tard. L'impacte en la salut dels fàrmacs falsificats és massa gran per no enfrontar-nos a una realitat complexa que sovint s'evita difondre, que existeix i requereix l'atenció dels governs més aviat possible.

Rescuing citizens from the "rule of rescue"

People feel a need to rescue identifiable individuals facing avoidable death or harm. This is a well known fact  explained in 1968 by the Nobel laureate Thomas Schelling from an economic perspective  and by Jonsen  in the bioethics context in 1986.

"A single death is a tragedy; a million deaths is a statistic." This quote reflects exactly what we are talking about. However, the issue is: Do you accept the rescue at any price with public money?

These previous posts of this blog: (1) and (2) explain the details. I'll not insist on what I've already said. I suggest you have a look at them.

Today you can asess these three facts:

1. A country spends 38m € in drugs for 249 patients in 2018. A lifetime treatment.

2. A country has a waiting list of 132.025 patients for surgery, 123.249 patients for diagnostic tests, and 424.715 patients waiting for a visit to the specialist. Total people waiting: 679.989 patients in a country with 7.543.825 inhabitants. 9% of the population is in the waiting list for a health service. However, 25% have voluntary duplicate insurance and could jump the list. Therefore the exact figure is 12% of inhabitants waiting.

3. A country knows that spending 10m € in addition every year can increase cardiac surgery by 600 interventions. This means 600 critical patients less in the waiting list. With 38m €, the number of cardiac interventions would be 2.280.

 Ask yourself what to do about it, what would you prefer to do with 38m€ every year ? Just apply them to 249 patients or to 2.280 (you are not on the waiting list, and we'll assume the same adjusted quality of life years for both cases). Anyway, it's too late to have your answer, the government has already decided for you, and maybe you don't agree with it, as I don't agree. The government prefers the rescue of 249 citizens.
Just to finish, check this final fact:

This country spends 1.192 € per capita of public budget on health. Another country under the same mandatory tax system is able to spend 1.635 €, 40% more !!!

More money allows to avoid such dilemmas for this country. Ask yourself if you want to stay in the former tax system that is damaging your health. Once you have the answer, you'll understand why this country wants to leave this unfair tax system as soon as possible.

Now at Brooklyn Museum