Loss aversion and the rough road for health care reform

An article from the Standard ponders why, despite widespread recognition that the country needs health care reform, we may not get it.

The relatively new field of behavioral economics--a blending of psychology and economics--helps makes sense of these clashing views. One major tenets of this sub-discipline is that people value a "loss" about twice as much as they value a "gain." And as a result, people are more risk averse than might be suggested by traditional, rational economic theory. In other words, instead of "rationally" weighing risks and rewards equally and then forming a judgment, behavioral economics has found risk and pain count more than benefits and rewards.

People might see some gains in reforming the overall system, but fear of changing what they have counts more. And while open to promises of health reform, they're concerned the government might mess things up.

Blumenthal quotes the Kaiser Foundation's pollster, Mollyann Brody, who argues, "it is really easy to scare people into thinking that reform will make their own situations worse off." But at the same time, as Blumenthal noted in a Pollster.com post last week, "people are also very anxious about their costs and future coverage under the status quo. It is that latter anxiety--much less than any altruistic desire to help out Americans without health care coverage--that drives the huge general desire for change and reform."

from Fear and Loathing in Health Care Reform - CBS News