Ask, how much?

I enjoyed this EconTalk podcast with Morris Fiorina discussing political polarization.

I also learned a valuable lesson. When somebody says that something sounds like a good idea, ask them how much they are willing to pay for it. Fiorina explains:

On spending items, we always ask these [in surveys]: do you think these programs should be increased, decreased, or kept the same? The only thing people ever want to cut is foreign aid, welfare, and the space program. Everything else they want to increase. But then if you ask them, what would you like to– I mean it’s true.

When you start asking them how much [it changes]. I remember when people in the business school here did a study during the health care fight: how much would people be willing to pay for universal access? Everybody says: that’s a good idea; of course everybody should have insurance. And I think they lost the majority at something like $50 a year for a family. That everybody’s willing to do something that’s good as long as it’s cheap. But if you say, well, it’s going to cost you $100, you say, well, I guess we can do without universal access.

Yep. Talk is cheap. It’s easy to say something is a good idea. You may even get a pat on the back. But, if we pry and ask how much they would be willing pay for it, we might discover they think it’s only a good idea if someone else pays for it.


7 thoughts on “Ask, how much?

  1. How much will it cost? How much will it save us? What possible social side effects might it have? What jobs will it create? What jobs will it take away? Who benefits the most from this? Who benefits the least?

    In short, what are all the possible consequences we can see if we engage in this (whatever it may be) action?

    • Yes, but it’s important to know how much someone is willing to personally pay to fund the nice sounding idea. If they support an idea that will cost everyone $1,000 a year to fund, but they are only willing to pay $50, they should pipe down.

  2. In “Never Enough,” Bill Voegeli suggests that social support programs typically tout open-ended goals (“end poverty” means what, exactly?), lack measureable objectives (so you never achieve visible progress), and the funding is “never enough,” according to program supporters. That is, if you ask a program supporter how much, in finite dollar terms, it will take to reach a program’s goal ($1 million? $500 million?), such that the program will have achieved its intent & may be ended, they have no answer, because it’s “never enough.”

  3. I totally agree that open ended goals are dangerous. I also agree that people should “put their money where their mouth is”.

    One difficulty in securing funding for any project is communicating clearly yet comprehensively what the effect of that project will be.

    Supposing everyone does want to cut the space program. One would hope that they are basing that decision partly on how much money it costs. That is to say, if we can’t afford it, it has to go. One would also hope that they are basing that decision partly on other impacts that having a space program might have – new research opportunities, pushing the frontiers of science, etc. And too one would hope that people are basing their decision in terms of priorities – as in if we defund the space program, are we putting the money somewhere else or simply not collecting as much taxes or paying off the debt or ??

    I’m not sure that boiling things down to “how much will it cost” is a functional problem solving tool when it comes to public policy.

    • ‘I’m not sure that boiling things down to “how much will it cost” is a functional problem solving tool when it comes to public policy.’

      First, it’s not just ‘how much it will cost?’ It’s ‘how much are you willing to pay?’ The beauty of this question is that it causes you to consider the cost-benefit, opportunity costs and trade-offs. You may not be right, but at least you are thinking about trade-offs, whereas when you only focus on benefits, you’re not. That’s a feedback problem.

      It’s easy to say something is good when you only consider the benefits. Just like the people in the survey — ‘universal coverage is good, so why not?’. But, to find out how much someone is willing to pay out, you find out just how good they think it is.

      Second, I can well imagine that avoiding the cost question has contributed to the problems Detroit is facing. As Thatcher once said, ‘The problem with socialism is that you eventually run out of other peoples money.’ Not meaning to ignite a debate on what is and isn’t socialism, but certainly one real feedback problem in the socialist model is that cost-benefit, trade-off feedback loop is very weak and the allocation mechanism tends to write checks that cannot be cashed.

      • Great point. I agree that if the phrase “how much are you willing to pay?” gets people to think more broadly about public policy questions, it is a good thing and I can see how that differs from “how much will that cost?”

        Although looking at my own previous comments and the post again, it’s clear to me that the distinction between the two phrases is apparently too subtle for me to catch at first glance. 🙂

  4. Pingback: Ask, how much? Part 2 | Our Dinner Table


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