Will RFK Jr Improve Our Health?
For roughly 30 years now, I have had a continued interest in the Economics of Type 2 diabetes. I have published four papers on the topic. In this Substack, I want to focus solely on how I interpret RFK Jr’s agenda on this major chronic condition.
First, some literature review.
Here is a first draft of my paper from 1994.
Kahn, Matthew E. "Diabetic risk taking: The role of information, education and medication." Journal of Risk and Uncertainty 18 (1999): 147-164.
Kahn, Matthew E. "Health and labor market performance: the case of diabetes." Journal of Labor Economics 16, no. 4 (1998): 878-899.
Kahn, Matthew E. "Education's role in explaining diabetic health investment differentials." Economics of Education Review 17, no. 3 (1998): 257-266.
Chiou, Tommy, Yusuke Tsugawa, Dana Goldman, Rebecca Myerson, Matthew Kahn, and John A. Romley. "Trends in racial and ethnic disparities in diabetes-related complications, 1997–2017." Journal of general internal medicine 35 (2020): 950-951.
A theme in my work here has been the implicit moral hazard challenge. If people with a taste for over-eating and not exercising are aware that there is a growing set of ex-post treatments such as pills and drugs and medical procedures for minimizing the complications of uncontrolled Type 2 diabetes, then they are LESS LIKELY to invest ex-ante in costly precautions. In the language of Econ 101 moral hazard, the anticipation of an ex-post bailout encourages ex-ante risk taking. We see this with Disaster relief in flood plains. We see this with Banks who are “Too Big to Fail” and I am claiming that many Americans believe that the medical establishment will bail them out through miracle drugs and treatments.
I am not the only economist who has studied this issue. Here is another paper that I like.
Klick, Jonathan, and Thomas Stratmann. "Diabetes treatments and moral hazard." The Journal of Law and Economics 50, no. 3 (2007): 519-538.
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I am providing this preamble because I foresee that RFK Jr. is going to emphasize individual choice and personal responsibility in his health initiatives. My reading of his worldview is that he doesn’t believe that there are “magical pills”. He wants Americans to invest more effort and money in their diet and exercise choices so that they are physically healthier and less likely to be diagnosed with chronic conditions at young ages. Such individuals would be less reliant on the drug industry and doctors in middle age and later on in the life cycle.
For economists who study the life-cycle dynamic programming problem, how does a society pivot and change the rules of the game so that people invest more in their health and nutrition when they are young?
There is a link here to my work on climate change adaptation. Consider a property owner who buys a home with cash and has no insurance. This home owner bears the costs of extreme events (the equivalent of a Type 2 diabetes diagnosis). This home owner has strong incentives to take proactive steps upfront to reduce her property’s fire and flood risk and storm risk. While these precautionary investments require making $ investments, they reduce the risk of future “fat tail” losses. The logic of the moral hazard effect predicts that such individuals will be less likely to make these up front investments if they anticipate that a Benevolent government will bail them out if a disaster occurs. If a government can commit to not make such transfers, then the asset owner has a greater incentive to protect the asset.
So, this logic has me thinking about how RFK jr. and the Trump Administration will nudge parents and young adults to be more sophisticated investors in their health through their allocation of $ for foods, and investment of time in exercise and being outside. RFK Jr. grew up rich and had plenty of time to fly his birds on his Mother’s Estate. For different young Americans, why is a health diet so untasty? How much do they exercise? Michelle Obama tried to nudge people to eat more healthy food. Did she succeed? Mike Bloomberg tried to tax junk food and I don’t think he succeeded.
What do health economists know about the dynamic effects of drug innovation? Conditional that one has a chronic disease, do such drugs cause a moral hazard effect? Does the anticipation that we can use drugs to handle obesity and Type 2 diabetes discourage younger people who are at risk from taking costly life style changes in behavior? How much risk should people face in order to “scare them sober”? Can the increase in health insurance access backfire as many people are technological optimists who believe that “magic pills” will protect them?
A good microeconomist will point out here that people differ. Some people have self control problems and can’t change their behavior. This pessimistic view implicitly claims that subgroups of the population are not “at the margin”. Why are they this way? Are the pessimists telling a “bad genes” theory? I don’t know if I believe that.
For those of you are open to scientific evidence. Take a look at Professor Ross-Dizon of Uchicago Booth is up to with these papers set in India. She is designing targeted nudges of people in India to walk more to reduce their Type 2 diabetes risk. This type of sophisticated targeting of incentives shows how good economists can help RFK Jr. achieve his noble goal at lower cost to society.
To wrap up, in both the climate change adaptation literature and the diabetes adaptation literature the same issue of “technological optimism” arises. Those who believe that there will be a cheap and effective ex-post solution for their challenge will be less likely to invest the time and effort ex-ante to reduce their risk exposure. Ex-post insurance and ex-ante self protection are substitutes. Robert Kennedy appears to embrace the mantra of “No Pain, No Gain”.
What social movement would be needed here? Arnold S of California has been pumping iron for decades telling Americans to get less flabby. What can the food producers and organic farms do to increase their supply of fresh foods that meet our nutritional goals and that people enjoy eating? What do economists know about the causes of food preferences? Why do we like sweet things so much and who among us can show some self control here?
If economists agree with RFK Jr’s overall goal, what is our advice to him for how to introduce new “rules of the game” that nudge our diverse nation to invest more in our health?
This is a very heavy topic which I think is, to some extent, beyond the scope of economics to answer overall. Take for example the growth of Ozempic which acts by reducing the urge to eat. On the other hand, food companies are intentionally making food such that people want to buy it (I believe one executive on a call said they'll make their snacks even more addictive in response to Ozempic). How do we model this arms race for example is probably too difficult (side note: I had a similar concern about economic models of Covid, since we do not know how to model the creation of new Covid variants).
Ultimately, in my opinion, it boils down to education/knowledge. The benefits of healthy eating are not just not being sick but also functioning well.
I think overall this is an interesting and important broader question that should be discussed on an interdisciplinary basis. Thank you for bringing it up!
Do you think that obesity drugs will have something like a Jevons Paradox? Drug protection from obesity leading to even worse eating and even less exercise, resulting in little change in obesity? We may be about to find out.
RFK has some views I strongly disagree with but he has said he will not take away vaccines that people want. (There is plenty of room to question the USA's specific vaccine schedule, especially for children, since it differs from that of other countries.) But he has the right general approach to health. If he can be a positive influence and combine that with reform (preferably abolition) of the FDA and the idiots who tell us what foods to eat, he may have a salutary effect.