Economic Incentive

Today’s XKCD is making the rounds — it’s not only hilarious, but an incredibly devastating way to look skeptically at the world.

A lot of things obviously cannot be debunked using economic incentive, but looking at who is making the money from something and how they are doing so is an interesting way to see through problems.

For example, when you look at homeopathy, who actually is profiting from it? Companies that don’t have to bear the onerous financial burden of proving anything to the FDA. This is potentially going to cost them in the UK, where their nationalized health service is no longer going to cover homeopathic medicine, but the companies are still allowed to sell what is essentially water as honest to goodness medical cures right alongside real, actual medicine.

Would they make more money if homeopathy actually worked? Of course they would, governments and insurance companies would make a killing. They’d just go to their local tap water and add a molecule of arsenic, and bam, millions of lives saved.

Then, there are individuals who make money from various made-up powers: psychics, tarot readers, and religions. How do they make their money? From gullible believers who give it to them. Would a psychic make more money if they were genuinely psychic than if they were tricking gullible people? Yes, they’d constantly be winning lotteries or finding buried treasure or controlling people’s minds to get into their Last Will and Testament. “I, the Queen of England, leave all of my money and property to David Blaine.”

Would religions make more money if they were selling a God that was real and as advertised? If prayer actually worked, everyone would be religious. If God really did smile on the faithful, the faithful would be rich as hell. And if he really smote the non-believers, Norway would have burned to the ground by now and secular Europe would have found God. How much money would the Vatican make if they could sell limb regrowing and cancer cures?

Can you imagine a world where there was no dissembling and these things could just point us to an actual track record of recorded miracles? Miracles that actually mattered, too, not just Grilled Cheesus or Bleeding Statues.

Economic incentive is complicated, of course. One of the anti-vaccine arguments is that Big Pharma is selling vaccines to make a big profit and that doctors push them on patients to get bonuses. But, there’s an even bigger profit motive from the government and insurance companies to keep people from getting sick. Blue Cross is more likely to get insurance payments from someone who lives past the age of 5, Kaiser is going to pay a lot less for a kid who doesn’t get paralyzed by Polio, and the government is going to get a lot more productive work hours out of kids who haven’t been permanently damaged or killed by preventable diseases.

And then there’s Andrew Wakefield, who started the anti-vax movement. He had a profit motive — he wanted to sell his own vaccine instead of the one that was popular at the moment. If that doesn’t discredit a movement, I don’t know what could.

So economics is a powerful tool in debunking, but you definitely need the whole picture — it’s easy to twist one incentive into the only incentive. Of course, most of the people who believe aren’t going to be dissuaded by the economic argument, but it’s certainly one that people innately understand. Money, as they say, talks.

(x-posted from

Economic Incentive

One thought on “Economic Incentive

  1. 1

    I like your take on this, and XKCD is always worth spreading around. As someone who works on drug pricing, I kind of suspect that if homeopathy did work, and they could prove it, the homeopathy companies would just charge more. As one of my professors once put it, “If a drug is cost saving [i.e., reduces overall medical costs] then you’re not charging enough for it.”

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