Prescribing work (Rantish)

FYI:  Rant – although I’ll try to make sure I write slowly and clearly, as it is an issue I want to be considered on but have to intrinsically include my moral views to such a degree it is a rant 🙂

Now I am relying on a news story, so potentially the actual pressure on doctors will not be such that they are “encouraged to question unemployed patients on their career goals”.  Furthermore we may not see incentive schemes that involve “rewarding doctors who get their patients off the benefit” (Note:  My impression is that this is the old “sickness beneficiary” patients that are being discussed here).  If we are not going to see these things occurring then that is good – and my post doesn’t need to be seen as an attack on the current government.

But if this is in fact in the pipeline, then either the current government is not utilitarian (whereby I’m taking that as maximising some form of social welfare function), or as a society “we” have a much more bitter and twisted view about beneficiaries than I had previously realised.  This is reinforced by the strange comments towards the end of the article such as:

“It is currently an inhibitor – a source of contention that gives the GP a perverse incentive to advocate for the client,” they said.


International research has shown consequences from being out of work include poorer mental and physical health, increased rates of mortality, and risk of cardiovascular disease, lung cancer and respiratory infections.

While the first quote is relevant, you may wonder why I picked the second.  It is true that a lack of employment is often related to these things, and it is true that giving people opportunity could improve their lives!  But just as with the constant confusion around externalities when they are actually internal to an individual there is something funny here.  Employment links “through” other things to outcomes for the individual, and by pinning it to this one outcome in such a way we are completely removing individual choice (as they could *choose* to join the labour force), the actual drivers of outcomes, and the true responsibilities of society.

Stop for a second here and ask a simple question, why?  Why does being out of work lead to these negative outcomes?  Why do people find it hard in a mental health sense to get into work, or integrate in a workplace?

Is it really because they aren’t being pressured enough by their GP?

I ask as this is the suggestion being put forward – but a cursory thought about what is going on suggests that this doesn’t make sense as a solution.  Why would increasing the cost for the individual of their current state of the world make them better off?

If we actually cared about the worst off in society, if we cared about those who are having problems integrating themselves into their community or workplace we would try actually dealing with those issues head on – rather than imposing a cost on them and saying “it is for their own good AND its cheaper than actually doing anything”!  Not being employed hits people because they don’t get that social interaction, it hits people because they feel isolated and alone, it hits people because they feel like they don’t have a purpose.

And hell, this would only get worse if manufacturing scarcity keeps falling, making society wealthier but ensuring we all have to become service providers or bust!  In such a case, it is social pressure from our perverse obsession with valuing people based on work that seems wrong – not the fact that people respond to this by feeling isolated!  But I digress.

Digression – but wait, isn’t it economists that only value people as a “labour input”?

The misidentification of economists as people who only value individuals based on their capacity to produce is disappointing – no economists think that way.  In fact, it is people who are extremely “outputs” based as in this that are closer to this view – in the current example employment is being treated as as the “output” of interest.  As we noted here, it is actual an inherent view of value which matters when setting policy, and visible outputs only give us a loose (and often not policy invariant) view on this.

The only way to really figure out how to make policy that improves outcomes is to step back from making conclusions about what we should do and to ask what is the relationship between things eg to find the ‘structural’ reasons why these matters are related, in ways that could correspond to value.  If we can get people to reveal value (prices are a useful mechanism for this often) this is great, but often we can’t – implying that for advising with regards to policy we are trying to understand relationships with regards to an unobservable target.  This implies that we must be very clear, and very descriptive, in giving said advice.

As a result of all this, economists happily recognise individuals have a role as a labour input, they provide labour and things are produced.  They then describe this.  Doing this in no way presupposes that we subjectively value individuals like machines, and that we think their only purpose comes from their ability to make things.  I remember trying to make clear during the discussion on the minimum wage (with associated rant) that as a society we shouldn’t be viewing the wage as a description of the value of someone, instead we should be separate the view of work and the value of the individual more clearly – remove the minimum wage, but ensure there is income adequacy through a minimum income.  Note:  This policy suggestion is normative, and many economists would disagree, I have used it as an “example” only.  However, this doesn’t rule out the first point – that when it comes to doing economics they are trying to be descriptive of action and choice, not prescriptive with regards to value, when they look at “people in their labour input hat”.

In this way we can comment descriptively on the way society values individuals.  Let me explain.

The use of labour, capital, land, and technology provides outputs with a series of claims on these outputs among the right holders for the different types of inputs.  The inherent value we place on each others lives can be inferred from the way people are willing to surrender some of this claim in order to do something like save someones life, provide a minimum safety net for the worst off, or spend on healthcare to improve their quality of life.  These measures suggest value that all of you are placing on each other – not the value economists place on you – and if it appears “too low”, your anger should be directed at yourselves instead of shooting the messenger 😉

Back to the point

Suggesting the that large scale welfare reforms during a major upheaval in the domestic economic was not sensible is the sort of thing that has led people to be called childish – something that in turn implies that, as an individual, I must be childish.

However, I’m willing to be a lot more “naive” or whatever and state that the entire framework for this is something I am uncomfortable with.

If we are honest about it, none of this is really about helping those in need.  It is because people are annoyed that they work all day, checking Facebook and looking and videos of cats, in order to produce something!  How dare these other people not work – not produce anything – and then scrounge resources off the tax payer!  It is this preference among a large section of New Zealand that National is pandering too with these sorts of policies.

If National introduces policies that increase stress for those in mental duress, or financially incentivise doctors to put people through this duress in an already hard time in their life, I will be unable to vote for them [if the GCSB business hadn’t already done enough].  I’ve already ruled out Labour and the Greens for their seeming unwillingness to leave the RBNZ independent and their push for schemes like NZ power and business subsidies (exchange rate intervention and picking winners).  I cant’ vote for NZ First, well because they are racist and don’t care about their policies making any sense.  But it isn’t that I can’t seem to vote for anyone, I want to anti-vote away from all of them – this isn’t the society I thought I was part of.  These are a series of views about how we treat people New Zealander’s were supposed to abhor.

Getting the wrong end of the stick

Now don’t get me wrong!  I could have the wrong end of the stick.  If when saying this:

“Work-focused conversations need to start in primary care,” they wrote.

They mean that they will spend time with the individual, and help them integrate into society and find their own way forward, this is golden.  I would expect this involves people who are trained to do that sort of work, so it would require spending.  And investing funds into those who are suffering a hard time in order to help increase their opportunities and quality of life is what our social contract is all about!  This does deal with my complaint earlier, and goes to the core of the problem – perfecto!

But there is a world of difference between increasing opportunity by opening doors to those who are in a bad place, and placing a cost on their shoulders.  And the focus on “work” instead of “social contact and integration” betrays this.

I hope to find out that I have the wrong end of the stick, I have ranted about nothing, and in truth the government is just interested in improving funding for counseling services and other forms of social assistance that help our most vulnerable.  I also hope to find that many in society shared my concerns when they read some of these quotes, and are happy to see that the government is not being punitive.

Update:  Brennan McDonald chats here.

16 replies
  1. Bill
    Bill says:

    Matt – You got it exactly right with this: ‘Why would increasing the cost for the individual of their current state of the world make them better off?’ Well said.

    • Elinor_Dashwood
      Elinor_Dashwood says:

      Because it will increase the attractiveness to them of changing that state?

      • Matt Nolan
        Matt Nolan says:

        But they already have the option of changing that state – and the benefit of doing so is unchanged. As a result, people that were going to move out of the state anyway are as well off as before, people who wouldn’t have but now do are “worse off”, and people who don’t move are worse off as well.

        To make it in the interest of the individual we have to appeal to the time inconsistency of the actions of the individual, and we have to argue that increasing the costs in this way is better than other mechanisms of dealing with this “internality”. This is a pretty significant stretch!

        Even in the case where internalities exist, the idea is to give people commitment mechanisms to help them commit to courses of action in their own interest – not to impose costs on them and state they will make everything better 😉

        • Elinor_Dashwood
          Elinor_Dashwood says:

          I’m not seeing that “the benefit of doing so is unchanged”. The benefit is surely the improvement you experience when you move from one state to another. If you shift from 2 to 5 instead of from 3 to 5, you will still end up at 5, but the benefit to you will be greater.

          • Matt Nolan
            Matt Nolan says:

            I think the key thing to keep in mind is that people have a choice regarding which state to be in – all we are is introducing a cost to try to get them to shift from one to the other.

            So if they were going to move out of the state in any case benefit of doing so would be greater than the cost of not moving out (the opportunity cost), so B1>B2 – where B1 is the benefit of moving to the labour force and B2 is the benefit of not being in the labour force (and opportunity cost of moving to the labour force).

            If this is the case, then introducing a cost C that takes place if we don’t enter the labour force doesn’t change the equation B1 is still > B2-C (where B2-C is the net benefit of being out of the labour force).

            However, if we are in a case where B1 is less than B2 then putting in place C does reduce the welfare of the person involved. They move into work if B1>B2-C and they don’t if we have B1<B2-C – however, in both case the return is less than the B2 they would have had otherwise (given both B1 and B2-C are strictly less than B2)!

            By imposing a cost, we hurt those who have are experiencing the most difficult time choosing to enter the labour force – imposing a cost to try and change choice to solve an "internatility" is hairy!

  2. detmackey
    detmackey says:

    I know it’s hard to keep track of everything, but don’t forget this government’s business subsidies (Tiwai, Sky City, loan to MediaWorks, irrigation subsidies, goals to grow exports to 40% of GDP, and the goofy export strategies Brennan’s been banging on about). All the parties seem to have odd desires for exports – just different ways to achieve those odd desires – but I don’t hear much from the minor parties about flat out handouts to businesses. The two major parties should know better.

    Makes me sad that I’m weighing up my choice by what this government is doing with probability 1 because officials and the public haven’t convinced them not to, versus what an alternative government says it will do with probability less than 1 (hoping they don’t as there’s still time for officials and the public to convince them not to (see Greens and quantitative easing)). Oof.

    Used to be a time I was proud to vote for [undisclosed party]. And by proud I mean I was happy that they had more well-reasoned policies than not.

    Recent months I’ve been muttering to myself while listening to the radio ‘you’re making it difficult, [undisclosed party]’, and then the other lot do something even stupider according to my values, and I feel better again.

    It shouldn’t be that way.

    • Matt Nolan
      Matt Nolan says:

      The road to hell is always pathed with good intentions – I have no doubt many of these things involve good intentions (the view that subsidisation will make us all richer). But there should be economists there pointing at trade-offs and distributional consequences – where have they all gone off to 😉

      I think that there is heaps of scope for debate around what is fair, and like I say in this post I am arguing with specific value judgments in mind. But the best thing we can do is to try to make our assumptions and the trade-offs clear, and I’m not sure politicians have the incentive to put in the time to do that – even if they had the intent to in the first place!

  3. detmackey
    detmackey says:

    I like the rest of the post, but would note that this approach is not limited to politicians and welfare reform. Officials often reason this way too.

    I remember the Immigration Act reforms a few years back which removed some/many appeal rights by immigrants against deportation being described as a positive to immigrants as ‘they would be returned back to their families in their home countries quicker’. That was the ‘analysis’ of officials, not politicians.


    • Matt Nolan
      Matt Nolan says:

      Officials within government often have to revise to the point where their message can not be quite how the analysts would have liked to put it. I have sympathy.

      I am lucky I get to just walk around saying things as I interpret them – and then hopefully having people disagreeing with me to tighten it up 🙂

      • detmackey
        detmackey says:

        Of course. Cabinet papers, in particular. But these were the regulatory impact statements which (are meant to be) the independent officials’ documents. Politicians can also be captured by their departments (GCSB?).

        • Matt Nolan
          Matt Nolan says:

          These points are all very true – and even independent consultants can talk themselves into giving advice that underplays some costs or benefits for a result!

          And that is why transparency is something we need to be vigilant about 🙂

  4. JC
    JC says:

    A very important part of your possible rant is the “social contract” and I would argue that it is nearly always, everywhere and endlessly argued in favour of the disadvantaged and rarely argued formally by the society and Govt which must pay for it.

    There are two sides to a social contract and if the disadvantaged get 90% of the prime time then it isn’t a contract but an authoritarian decree.. in effect a decree for the perpetuation of poverty, poor health and earlier death plus other social maladies.. it would be the height of irresponsibility if doctors, other officials and experts did not advocate for work as a powerful remedy.

    Even the poor, the unemployed, the sick, the disadvantaged and the elderly understand this.. otherwise no conservative Govt could ever be elected if people did not vote against their interests. There are a great many parents of indolent teenagers who would dearly love their doc to tell their kids of the link between physical and mental health and work.

    This isn’t primarily about economics but work as therapy.


    • Matt Nolan
      Matt Nolan says:

      “There are two sides to a social contract and if the disadvantaged get
      90% of the prime time then it isn’t a contract but an authoritarian

      This is an interesting point – I appreciate what you are saying, and thanks for raising the point.

      From my standpoint the disadvantaged get little of the actual focus of the social contract – and we usually arbitrarily focus on the middle classes and people who are well enough off to live, but not to afford the payments on their second car 😉

      I don’t agree with the idea that people who are struggling in society and as a result are on sickness benefits and not working are equivalent to indolent teenagers – and I find the association a touch inappropriate.

      “This isn’t primarily about economics but work as therapy.”

      What a stunning free lunch – we both get output, and we treat these people of the ills they are facing 🙂 .

      If it was that easy it would be grand, but this is a tad over-simplistic way of looking at people who are struggling to integrate themselves back into the labour market. These people are making choices, and we should be trying to understand why they make these choices to pick the best policy prescriptions – same way we do with other policies!

      If we actually care about the welfare of these people, isn’t the solution making sure that they get appropriate care and treatment to help them move back into the labour force – not attacking them whenever they visit a doctor? As I say in the post, I am a fan of treatment AND using work as a way of doing this, I am not a fan of imposing a cost on people and just stating it is for their own good. As I state at the end of the post:

      “There is a world of difference between increasing opportunity by opening
      doors to those who are in a bad place, and placing a cost on their

      Coming back to the social contract, let us remember that society is filled with heterogenous individuals. Some more comfortable with the way we’ve organised society and with the way we look at and treat work. When someone has sufficiently heterogenous preferences from everyone else, they will be alienated by the way society ends up – and we should really try to have some empathy for this, and think of the best way to be accomodative. Getting their doctor to push them around doesn’t really fit into this!

      I would note something at this point. It is these small groups who are very heterogenous who are most heavily displaced by the focus on the social good and the organisation of society around the preferences of the majority (democracy and markets). There is supposed to be a counterpoint to this, that accepts this difference – or we are heavily leaning against their liberty as individuals.

  5. Kirk
    Kirk says:

    Do you think there are parallels between this issue and Auckland City’s proposal to ban begging?

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