Confusopolies

Scott Adams of Dilbert fame:

I’m fascinated by the debate over fixing/expanding the healthcare system in the United States. The issue is so complex that people understandably fall back on basic philosophies of the free market system to reach an opinion. For example, if you think the government tends to screw up everything it touches, and the free market does a good job, you might come down on the side of less government involvement in the healthcare system. But that view ignores the confusopoly effect.

A confusopoly – a term I concocted several years ago – is any industry that intentionally makes its products and services too complicated for comparison shopping. The best examples of confusopolies are cell phone carriers and insurance companies. And health insurance companies might be the most confusing confusopoly of all. I suspect that no individual has the knowledge, time, and information necessary to effectively compare two health insurance plans. And in that environment the free market doesn’t operate efficiently.

A corollary of that seems to be that the more complex the issue, the more jingoistic the arguments around it will be, and the more the incentive to resort to symbolic gestures. Case in point: illegal slums in Bombay? Simply move the regularization date forward from 1995 to 2000 and hey presto! Illegal slums down by a few hundred thousand.

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