Saturday, September 5, 2009

Nobel laureate Robert Fogel explains why healthcare costs are rising so fast in an article titled Forecasting the Cost of U.S. Healthcare
The main factor is that the long-term income elasticity of the demand for healthcare is 1.6—for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent.
Hat tip Greg Mankiw who also recommends James DeLong's article Maybe We Should Spend More on Healthcare.

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