Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, March 12, 2005

Why Not Make It a Case?

The state of Western Australia is finding it difficult to recruit general practioner physicians [not unlike the problems of many rural communities in Ontario]. As an inducement, the Australian Medical Association is offering current doctors a bounty in the form of a bottle of Grange (high-end wine) for each successfully sponsored immigration of a general practitioner.

Robert Gottliebsen understands the economics of the situation very well.

One of the reasons we are short of medical practitioners is that Australia places strict limits on the number of doctors it trains each year. And the rewards for specialists are usually greater than general practice so that the low number of trained GPs is further depleted by specialisation.

In the past many GPs worked very long hours. Now more are working less hours to improve their lifestyle.

Of course, part of the reason for the exodus of GPs is that the Government has put a low-level clamp on the fee levels that GPs can charge for bulk-billing patients.

The parallels to the shortage of doctors in Canada are clear: restricted entry into the profession, combined with gubmnt-set fees that are lower than the doctors' opportunity costs, with the result that the quantity demanded outstrips the quantity supplied at current prices.

As BrianF, who sent this to me, says, "Even doctors respond to incentives. But governments don't believe that or, if they believe it, don't want it. "

Update: In response to this piece, Jack wrote:

In this vein, the just-announced increase in medical training spots in Ontario would seem to be a bit off the mark.

The reason is that the major difficulty with the supply of GPs recently has been the declining percentage of medical school graduates choosing this path. As it is, some family medicine residency training positions go unfilled. Creating more of them might just create a higher vacancy rate. The life just isn't attractive anymore ...

Of course if you pile enough people into the residency sorting gate, you will inevitably get a few more in the GP slots, but it seems to me to be a very inefficient way of going about it.

In other words, the inducements for becoming a small-town GP simply are not high enough to meet or exceed the opportunity costs. Graduates from medskool would rather become specialists or practice in larger urban areas.

Perhaps in Western Australia, they should be offering the wine to medskool graduates instead of to people who are already doctors.
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