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Luigi Einaudi Luigi Einaudi, (; 24 March 1874 – 30 October 1961) was an Italian politician and economist. He served as the second President of Italy between 1948 and 1955. Einaudi was born to Lorenzo and Placida Fracchia in Carrù, in the province of Cuneo, Piedmont. In Turin he attended Liceo classico Cavour and completed his university studies; in the same years he became acquainted with socialist ideas and collaborated with the magazine "Critica sociale", directed by the socialist leader Filippo Turati. In 1895, after overcoming financial difficulties, he graduated in jurisprudence, and was later appointed as professor in the University of Turin, the Polytechnic University of Turin and the Bocconi University of Milan. From the early 20th century Einaudi moved increasingly towards a more conservative stance. In 1919 he was named Senator of the Kingdom of Italy. He also worked as a journalist for important Italian newspapers such as "La Stampa" and "Il Corriere della Sera", as well as being financial correspondent for "The Economist". An anti-fascist, he stopped working for Italian newspapers from 1926, under the Fascist regime, resuming his professional relationship with the "Corriere della Sera" after the fall of the regime in 1943. After the Armistice (8 September 1943) he fled to Switzerland, returning to Italy in 1944 | https://en.wikipedia.org/wiki?curid=775026 |
Luigi Einaudi Einaudi was Governor of the Bank of Italy from 5 January 1945 until 11 May 1948, and was also a founding member of the Consulta Nazionale which opened the way to the new Parliament of the Italian Republic after World War II. Later he was Minister of Finances, Treasury and Balance, as well as Vice-Premier, in 1947–48. He was also a member of the neo-liberal think tank the Mont Pelerin Society. On 11 May 1948 he was elected the second President of the Italian Republic. At the end of the seven-year term of office in 1955 he became Life Senator. Einaudi was a member of numerous cultural, economic and university institutions. He was a supporter of the ideal of European Federalism. Einaudi personally managed the activities of his farm near Dogliani, producing Nebbiolo wine, for which he boasted to be using the most advanced agricultural developments. In 1950, monarchist satirical magazine "Candido" published a cartoon in which Einaudi is at the Quirinal Palace, surrounded by a presidential guard of honour (the "corazzieri") of giant bottles of Nebbiolo wine, each labeled with the institutional logo. The cartoon was judged a lese-majesty by a court of the time, and Giovannino Guareschi, as the director of the magazine, was held responsible and sentenced. died in Rome in 1961. Both his son Giulio, a prominent Italian publisher, and his grandson, Ludovico, a neo-Classical musician, have subsequently made names for themselves. Another son, Mario, was a Cornell University professor and active anti-fascist | https://en.wikipedia.org/wiki?curid=775026 |
Luigi Einaudi The Mario Einaudi Center For International Studies is named after him. Additionally, Mario founded the Fondazione in Turin in honor of his father. Also the research center of the Bank of Italy, the Einaudi Institute for Economics and Finance (EIEF), is named in honor of Luigi Einaudi. | https://en.wikipedia.org/wiki?curid=775026 |
Market liberalism The term market liberalism is used in two distinct ways. In the United States, the term is used as a synonym to classical liberalism. In this sense, market liberalism depicts a political ideology, combining a market economy with personal liberty and human rights in contrast to social liberalism which combines personal liberty and human rights along with a mixed economy and welfare state. In Europe and elsewhere, the term market liberalism is often used as a synonym to economic liberalism, depicting a policy supporting the economic aspects of liberalism, without necessarily including the political aspects of liberalism. In some political spheres, market liberalism refers to a economically liberal society that also provides a minimal to moderate-sized welfare state for its citizens. | https://en.wikipedia.org/wiki?curid=777087 |
Double default occurs in banking, when the obligor and the guarantor fail to meet their obligations. | https://en.wikipedia.org/wiki?curid=780410 |
Finance charge In United States law, a finance charge is any fee representing the cost of credit, or the cost of borrowing. It is interest accrued on, and fees charged for, some forms of credit. It includes not only interest but other charges as well, such as financial transaction fees. Details regarding the federal definition of finance charge are found in the Truth-in-Lending Act and Regulation Z, promulgated by the Federal Reserve Board. In personal finance, a finance charge may be considered simply the dollar amount paid to borrow money, while interest is a percentage amount paid such as annual percentage rate (APR). These definitions are narrower than the typical dictionary definitions or accounting definitions. Creditors and lenders use different methods to calculate finance charges. The most common formula is based on the average daily balance, in which daily outstanding balances are added together and then divided by the number of days in the month. In financial accounting, interest is defined as any charge or cost of borrowing money. Interest is a synonym for finance charge. In effect, the accountant looks at the entire cost of settlement on a Housing and Urban Development (HUD) form 1 (the HUD-1 Settlement Statement) document as interest unless that charge can be identified as an escrow amount or an amount that is charged to current expenses or expenditures other than interest, such as payment of current or prorated real estate taxes. | https://en.wikipedia.org/wiki?curid=786961 |
Standard Occupational Classification System The Standard Occupational Classification (SOC) System is a United States government system of classifying occupations. It is used by U.S. federal government agencies collecting occupational data, enabling comparison of occupations across data sets. It is designed to cover all occupations in which work is performed for pay or profit, reflecting the current occupational structure in the United States. The 2010 SOC includes 840 occupational types. Users of occupational data include government program managers, industrial and labor relations practitioners, students considering career training, job seekers, vocational training schools, and employers wishing to set salary scales or locate a new plant. The SOC codes have a hierarchical format, so for example the code "15-0000" refers to occupations in the "Computer and Mathematical Occupations" category, and "15-1130" is a subset for "Software Developers and Programmers". The SOC does not categorize industries or employers. There are parallel category systems for industries used with SOC data, most commonly NAICS. National variants of the SOC are used by the governments of the United Kingdom, Canada, Spain the Philippines, and Singapore. The SOC was established in 1977, and revised by a committee representing specialists from across U.S. government agencies in the 1990s. SOC codes were updated again in 2010, and on November 28, 2017, the Office of Management and Budget (OMB) published a Federal Register notice detailing the final decisions for the 2018 SOC. | https://en.wikipedia.org/wiki?curid=787561 |
Economic power Economists use several concepts featuring the word power: Scholars of international relations also refer to the economic power of a country as a factor influencing its power in international relations. | https://en.wikipedia.org/wiki?curid=788900 |
Arbitrage pricing theory In finance, arbitrage pricing theory (APT) is a general theory of asset pricing that holds that the expected return of a financial asset can be modeled as a linear function of various factors or theoretical market indices, where sensitivity to changes in each factor is represented by a factor-specific beta coefficient. The model-derived rate of return will then be used to price the asset correctly—the asset price should equal the expected end of period price discounted at the rate implied by the model. If the price diverges, arbitrage should bring it back into line. The theory was proposed by the economist Stephen Ross in 1976. The linear factor model structure of the APT is used as the basis for many of the commercial risk systems employed by asset managers. Risky asset returns are said to follow a "factor intensity structure" if they can be expressed as: Idiosyncratic shocks are assumed to be uncorrelated across assets and uncorrelated with the factors. The APT states that if asset returns follow a factor structure then the following relation exists between expected returns and the factor sensitivities: That is, the expected return of an asset "j" is a linear function of the asset's sensitivities to the "n" factors. Note that there are some assumptions and requirements that have to be fulfilled for the latter to be correct: There must be perfect competition in the market, and the total number of factors may never surpass the total number of assets (in order to avoid the problem of matrix singularity) | https://en.wikipedia.org/wiki?curid=793367 |
Arbitrage pricing theory For a set of assets with returns formula_12, factor loadings formula_13, and factors formula_14, a general factor model that is used in APT is:formula_15where formula_16 follows a multivariate normal distribution. In general, it is useful to assume that the factors are distributed as:formula_17where formula_18 is the expected risk premium vector and formula_19 is the factor covariance matrix. Assuming that the noise terms for the returns and factors are uncorrelated, the mean and covariance for the returns are respectively:formula_20It is generally assumed that we know the factors in a model, which allows least squares to be utilized. However, an alternative to this is to assume that the factors are latent variables and employ factor analysis - akin to the form used in psychometrics - to extract them. Arbitrage is the practice of taking positive expected return from overvalued or undervalued securities in the inefficient market without any incremental risk and zero additional investments. In the APT context, arbitrage consists of trading in two assets – with at least one being mispriced. The arbitrageur sells the asset which is relatively too expensive and uses the proceeds to buy one which is relatively too cheap. Under the APT, an asset is mispriced if its current price diverges from the price predicted by the model | https://en.wikipedia.org/wiki?curid=793367 |
Arbitrage pricing theory The asset price today should equal the sum of all future cash flows discounted at the APT rate, where the expected return of the asset is a linear function of various factors, and sensitivity to changes in each factor is represented by a factor-specific beta coefficient. A correctly priced asset here may be in fact a "synthetic" asset - a "portfolio" consisting of other correctly priced assets. This portfolio has the same exposure to each of the macroeconomic factors as the mispriced asset. The arbitrageur creates the portfolio by identifying n correctly priced assets (one per risk-factor, plus one) and then weighting the assets such that portfolio beta per factor is the same as for the mispriced asset. When the investor is long the asset and short the portfolio (or vice versa) he has created a position which has a positive expected return (the difference between asset return and portfolio return) and which has a net-zero exposure to any macroeconomic factor and is therefore risk free (other than for firm specific risk). The arbitrageur is thus in a position to make a risk-free profit: The APT along with the capital asset pricing model (CAPM) is one of two influential theories on asset pricing. The APT differs from the CAPM in that it is less restrictive in its assumptions. It allows for an explanatory (as opposed to statistical) model of asset returns. It assumes that each investor will hold a unique portfolio with its own particular array of betas, as opposed to the identical "market portfolio" | https://en.wikipedia.org/wiki?curid=793367 |
Arbitrage pricing theory In some ways, the CAPM can be considered a "special case" of the APT in that the securities market line represents a single-factor model of the asset price, where beta is exposed to changes in value of the market. A disadvantage of APT is that the selection and the number of factors to use in the model is ambiguous. Most academics use three to five factors to model returns, but the factors selected have not been empirically robust. In many instances the CAPM, as a model to estimate expected returns, has empirically outperformed the more advanced APT. Additionally, the APT can be seen as a "supply-side" model, since its beta coefficients reflect the sensitivity of the underlying asset to economic factors. Thus, factor shocks would cause structural changes in assets' expected returns, or in the case of stocks, in firms' profitabilities. On the other side, the capital asset pricing model is considered a "demand side" model. Its results, although similar to those of the APT, arise from a maximization problem of each investor's utility function, and from the resulting market equilibrium (investors are considered to be the "consumers" of the assets). As with the CAPM, the factor-specific betas are found via a linear regression of historical security returns on the factor in question. Unlike the CAPM, the APT, however, does not itself reveal the identity of its priced factors - the number and nature of these factors is likely to change over time and between economies | https://en.wikipedia.org/wiki?curid=793367 |
Arbitrage pricing theory As a result, this issue is essentially empirical in nature. Several "a priori" guidelines as to the characteristics required of potential factors are, however, suggested: Chen, Roll and Ross identified the following macro-economic factors as significant in explaining security returns: As a practical matter, indices or spot or futures market prices may be used in place of macro-economic factors, which are reported at low frequency (e.g. monthly) and often with significant estimation errors. Market indices are sometimes derived by means of factor analysis. More direct "indices" that might be used are: | https://en.wikipedia.org/wiki?curid=793367 |
List of important publications in economics This is a list of important publications in economics, organized by field. Some reasons why a particular publication might be regarded as important: Description: The book is usually considered to be the beginning of modern economics. It begins with a discussion of the Industrial Revolution. Later it critiques the mercantilism and a synthesis of the emerging economic thinking of his time. It is best known for the idea of the invisible hand , although this idea is only mentioned once in the book. Smith was critical of the 'vile maxim' of the 'masters of mankind', all for themselves and nothing for other people. The Butcher, the Baker, and the Brewer provide goods and services to each other out of self-interest; the unplanned result of this division of labor is a better standard of living for all three. Importance: Topic creator, Breakthrough, Influence, Introduction Description: Elaborates, clarifies and corrects previous theories, and adds important new concepts Importance: Breakthrough, influence (esp on Marx), broadened scientific foundations of economics Description: Das Kapital is a political-economic treatise by Karl Marx. Marx wrote this critical analysis of capitalism and of the political economy from the perspective of historical materialism, the view that history can be understood as a sequence of modes of production in which exploiting classes extract an economic surplus from exploited classes | https://en.wikipedia.org/wiki?curid=799398 |
List of important publications in economics Importance: Breakthrough, Influence Description: Describes how poverty in the midst of plenty results from unequal rights to use natural resources, and declining wages in the face of increasing labor productivity results from the Law of Rent. Advocated Georgism, specifically a land value tax. Importance: Influence, Breakthrough... "Influence": Credited with co-founding of marginal utility analysis and the Austrian School of economics. "Influence": Standard text for generations of economics students. Importance:: Influential multi-level, best-selling principles textbook that popularized neoclassical synthesis of Keynesian economics and neoclassical economics. Description: See Importance. Importance: The book "built" on ordinal utility and mainstreamed the now-standard distinction between the substitution effect and the income effect for an individual in demand theory in the 2-good case. It generalized analysis to the case of one good and all other goods, that is, the "composite good". It aggregated individuals and businesses through demand and supply across the economy. It anticipated the aggregation problem, most acutely for the stock of capital goods. It introduced general equilibrium theory to an English-speaking audience, refined the theory, and for the first time attempted a rigorous statement of stability conditions for general equilibrium | https://en.wikipedia.org/wiki?curid=799398 |
List of important publications in economics Among the most important list of publication in macroeconomics are: Description: In this book, Keynes put forward a theory based upon the notion of aggregate demand to explain variations in the overall level of economic activity, such as were observed in the Great Depression. The total income in a society is defined by the sum of consumption and investment; and in a state of unemployment and unused production capacity, one can only enhance employment and total income by first increasing expenditures for either consumption or investment. Importance: Topic creator, Breakthrough, Influence Description: Friedman and Schwartz used changes in monetary aggregates to explain business cycle fluctuations in the United States economy. Importance: Influence Description: The book by the mathematician John von Neumann and economist Oskar Morgenstern. It contained a mathematical theory of economic and social organization, based on a theory of games of strategy. This is now a classic work, upon which modern-day game theory is based. Game theory has since been widely used to analyze real-world phenomena from arms races to optimal policy choices of presidential candidates, from vaccination policy to major league baseball salary negotiations. It is today established, both throughout the social sciences and in a wide range of other sciences | https://en.wikipedia.org/wiki?curid=799398 |
List of important publications in economics Importance: Topic creator, Influence The book showed how operationally meaningful theorems can be described with a small number of analogous methods, thus providing "a general theory of economic theories." It moved mathematics out of the appendices (as in John R. Hicks's Value and Capital) and helped change how standard economic analysis across subjects could be done with the same mathematical methods. Importance and Influence: Accelerated change in standard methods Description: Importance: Description: Importance: Description: Importance : Description: Importance: Description: Describes the Dickey–Fuller test. Importance: Description: Emphasizes the difference between statistical significance and economic significance, and shows that the understanding is not clear in a review of papers from "The American Economic Review". Importance: Raised the caution against "asterisk economics" in econometrics to another level. See McCloskey critique. Description: Importance: Description: Extensive study about the theoretical inclusion and empirical importance of education in production. Importance: Classic study of how investment in an individual's education and training is similar to business investments. Description: Empirical investigation of the labor market returns to education. Importance: Popularizing the empirical research in that subfield. Coining the so-called "Mincer equation". Description: Definitive one-volume resource on the field | https://en.wikipedia.org/wiki?curid=799398 |
List of important publications in economics Importance: Introduction Description: Importance: Description: In this article, Prospect theory, a descriptive theory of choices under uncertainty, is introduced, bringing together ideas from psychology (framing and probability weighting) and economics (expected utility). Importance: Topic creator, Breakthrough Description: A first structured and methodical survey of economic methods, with a focus on methodology. Importance: Consolidation of the field, methodological issues. Description: A handbook for advanced experimental and behavioral economics students. Importance: Introduction Description: The experimental economics handbook. Importance: Introduction, Influence Description: Development of the utility framework which shows an optimum can be reached using a portfolio of investments. In effect the first real proof that you should not put all your eggs in one basket. Importance: Precursor to most modern portfolio theory work in finance. Description: Development of the capital asset pricing model used to determine appropriate prices for assets. Importance: Topic creator, Influence Description: It developed the Black–Scholes model for determining the price of options, in particular stock options. The use of the Black–Scholes formula has become pervasive in financial markets, and has been extended by numerous refinements. Importance: Breakthrough, Influence The Entropy Law and the Economic Process (1971, Harvard University Press) by Nicholas Georgescu-Roegen | https://en.wikipedia.org/wiki?curid=799398 |
List of important publications in economics Steady-State Economics (2nd edition, 1991, Island Press) by Herman Daly Natural Capitalism, Paul Hawken Small Is Beautiful, E.F. Schumacher "Economics and Consumer Behavior", Deaton & Muellbauer, Cambridge. Description: Importance: Description: Importance: Description: First modern development economics textbook Importance: Introduction Description: Widely used textbook. Importance: Introduction Description: Widely used textbook. Importance: Introduction Description: examines the last 30 years of development economics, viewed through the World Bank's World Development Reports. Description: Pigou was the one of the most influential economists that dealt with Welfare economics. He developed the idea of Pigovian tax. Importance: Topic creator, Breakthrough, Influence Description: Inspired renewed interest in basic welfare issues, mentioned in Sen's Nobel citation Importance: Influence Description: Explores the "specific differentia of medical care as the object of normative economics", demonstrating that the consideration of uncertainty is key to understanding markets in health care. Importance: Generally considered a seminal work of enduring significance; key to the foundation of health economics as a field of study. Description: The standard health economics textbook in most leading universities. It assumes some background knowledge in economics. Importance: Introduction. Description: The most comprehensive available collection of essays on contemporary health economics | https://en.wikipedia.org/wiki?curid=799398 |
List of important publications in economics Advanced readers will appreciate its mathematical rigor. Those who are seeking research or dissertation topics should find this two-volume set to be an invaluable resource. Posner, Richard A. "Economic Analysis of Law." (1973) | https://en.wikipedia.org/wiki?curid=799398 |
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist, the 1982 laureate in Nobel Memorial Prize in Economic Sciences and a key leader of the Chicago School of Economics. Stigler was born in Seattle, Washington, the son of Elsie Elizabeth (Hungler) and Joseph Stigler. He was of German descent and spoke German in his childhood. He graduated from the University of Washington in 1931 with a BA and then spent a year at Northwestern University from which he obtained his MBA in 1932. It was during his studies at Northwestern that Stigler developed an interest in economics and decided on an academic career. After he received a tuition scholarship from the University of Chicago, Stigler enrolled there in 1933 to study economics and went on to earn his Ph.D. in economics there in 1938. He taught at Iowa State College from 1936 to 1938. He spent much of World War II at Columbia University, performing mathematical and statistical research for the Manhattan Project. He then spent one year at Brown University. He served on the Columbia faculty from 1947 to 1958. At Chicago, he was greatly influenced by Frank Knight, his dissertation supervisor. Milton Friedman, a friend for over 60 years, commented that it was remarkable for Stigler to have passed his dissertation under Knight, as only three or four students had ever managed to do so in Knight's 28 years at Chicago. Stigler's influences included Jacob Viner and Henry Simons as well as students W. Allen Wallis and Friedman | https://en.wikipedia.org/wiki?curid=800930 |
George Stigler Stigler is best known for developing the "Economic Theory of Regulation", also known as capture, which says that interest groups and other political participants will use the regulatory and coercive powers of government to shape laws and regulations in a way that is beneficial to them. This theory is a component of the public choice field of economics but is also deeply opposed by public choice scholars belonging to the "Virginia School," such as Charles Rowley. He also carried out extensive research in the history of economic thought. Stigler's most important contribution to economics was published in his landmark article, "The Economics of Information." According to Friedman, Stigler "essentially created a new area of study for economists." Stigler stressed the importance of information: "One should hardly have to tell academicians that information is a valuable resource: knowledge is power. And yet it occupies a slum dwelling in the town of economics." His 1962 article "Information in the Labor Market" developed the theory of search unemployment. In 1963 he was elected as a Fellow of the American Statistical Association. He was known for his sharp sense of humor, and he wrote a number of spoof essays. In his book "The Intellectual and the Marketplace", for instance, he proposed "Stigler's Law of Demand and Supply Elasticities": "all demand curves are inelastic and all supply curves are inelastic too | https://en.wikipedia.org/wiki?curid=800930 |
George Stigler " The essay referenced studies that found many goods and services to be inelastic over the long run and offered a supposed theoretical proof; he ended by announcing that his next essay would demonstrate that the price system does not exist. Another essay, "A Sketch on the Truth in Teaching," described the consequences of a (fictional) set of court decisions that held universities legally responsible for the consequences of teaching errors. The Stigler diet is also named after him. Stigler wrote numerous articles on the history of economics, published in the leading journals and republished 14 of them in 1965. The "American Economic Review" said, "many of these essays have become such well-known landmarks that no scholar in this field should be unfamiliar with them... The lucid prose, penetrating logic, and wry humor... have become the author's trademarks." In 1962, Stigler wrote an article, "The Problem of the Negro", where he argued that the leaders of the black community performed "a terrible disservice to identify the white man as the main obstacle to the rise of the negro", denouncing it as "false as a guide to improvement" because "it must lead to hatred, and hatred to violence". He argued that white people frequently avoided blacks as neighbors, not because of racism, but because of a "rapid rise in crime and vandalism" that may follow | https://en.wikipedia.org/wiki?curid=800930 |
George Stigler He cited a partial explanation of black unemployment due to "Lacking education, lacking a tenacity of purpose, lacking a willingness to work hard, he will not be an object of employers' competition". Stigler proposes that the solution to persistent low income and social issues of the black community lies not in state programs, but in fostering "an unquenchable thirst for knowledge in the Negro youth" and encouraging "the love of knowledge and the willingness to work hard". Stigler was a founding member of the Mont Pelerin Society and was its president from 1976 to 1978. He was conservative. He received National Medal of Science in 1987. | https://en.wikipedia.org/wiki?curid=800930 |
Triangle model In macroeconomics, the triangle model employed by new Keynesian economics is a model of inflation derived from the Phillips Curve and given its name by Robert J. Gordon. The model views inflation as having three root causes: built-in inflation, demand-pull inflation, and cost-push inflation. Unlike the earliest theories of the Phillips Curve, the triangle model attempts to account for the phenomenon of stagflation. | https://en.wikipedia.org/wiki?curid=801323 |
Trailing twelve months Trailing Twelve Months (TTM) is a measurement of a company's financial performance (income and expenses) used in finance. It is measured by using the income statements from a company's reports (such as interim, quarterly or annual reports), to calculate the income for the twelve-month period immediately prior to the date of the report. This figure is calculated by analysts because quarterly and interim reports often show only income from the preceding 3, 6 or 9 months, not a full year. Because it does not represent a full year, this data can be skewed by seasonal trading patterns, such as higher sales over Christmas, giving a less accurate picture of a company's fiscal health. Typically trailing twelve months figures are generated to show either the most recent twelve months of a company's trading or to show the last twelve months of its trading before a certain event, such as an acquisition, took place. If no quarterly or interim report has been issued between the last preliminary report or annual report and the date in question, then there is no need to generate trailing twelve months figures, because annual and preliminary reports already contain figures for 12 months. Trailing 12 months figures are generated using the last interim or quarterly report a company has issued before the date in question | https://en.wikipedia.org/wiki?curid=801336 |
Trailing twelve months You generate a trailing twelve months figure for each item in the income statement by adding the figure for the reporting period since the company's financial year end to the figure in the annual report and taking off the figure for the matching period the previous year (e.g. 3 months from 1 Jan 2008 to 31 March 2008 plus 12 months to 31 December 2007 minus 3 months from 1 January 2007 to 31 March 2007 to give you 12 months from 1 April 2007 to (trailing) 31 March 2008). A company's balance sheet is not affected by this, as a balance sheet only ever reflects a single point in time, not the events across a year. If a Company reports $1 million in quarterly revenue in 3/31/2000, a $10 million yearly revenue on 12/31/2000, and $4 million quarterly revenue in 3/31/2001, the trailing twelve months revenue is calculated as $13 million as follows. "Most Recent Quarter(s) + Most Recent Year - The Corresponding Quarter(s) 12 Months Before the Most Recent Quarter(s)" $4m + $10m - $1m = $13m The trailing twelve months calculation can also be presented like this: | https://en.wikipedia.org/wiki?curid=801336 |
Comparison of the healthcare systems in Canada and the United States is often made by government, public health and public policy analysts. The two countries had similar healthcare systems before Canada changed its system in the 1960s and 1970s. The United States spends much more money on healthcare than Canada, on both a per-capita basis and as a percentage of GDP. In 2006, per-capita spending for health care in Canada was US$3,678; in the U.S., US$6,714. The U.S. spent 15.3% of GDP on healthcare in that year; Canada spent 10.0%. In 2006, 70% of healthcare spending in Canada was financed by government, versus 46% in the United States. Total government spending per capita in the U.S. on healthcare was 23% higher than Canadian government spending, and U.S. government expenditure on healthcare was just under 83% of total Canadian spending (public and private) though these statistics don't take into account population differences. Studies have come to different conclusions about the result of this disparity in spending. A 2007 review of all studies comparing health outcomes in Canada and the US in a Canadian peer-reviewed medical journal found that "health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent." Some of the noted differences were a higher life expectancy in Canada, as well as a lower infant mortality rate than the United States | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States One commonly cited comparison, the 2000 World Health Organization's ratings of "overall health service performance", which used a "composite measure of achievement in the level of health, the distribution of health, the level of responsiveness and fairness of financial contribution", ranked Canada 30th and the US 37th among 191 member nations. This study rated the US "responsiveness", or quality of service for individuals receiving treatment, as 1st, compared with 7th for Canada. However, the average life expectancy for Canadians was 80.34 years compared with 78.6 years for residents of the US. The WHO's study methods were criticized by some analyses. While life-expectancy and infant mortality are commonly used in comparing nationwide health care, they are in fact affected by many factors other than the quality of a nation's health care system, including individual behavior and population makeup. A 2007 report by the Congressional Research Service carefully summarizes some recent data and noted the "difficult research issues" facing international comparisons. In 2004, government funding of healthcare in Canada was equivalent to $1,893 per person. In the US, government spending per person was $2,728. The Canadian healthcare system is composed of at least 10 mostly autonomous provincial healthcare systems that report to their provincial governments, and a federal system which covers the military and First Nations. This causes a significant degree of variation in funding and coverage within the country | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Canada and the US had similar healthcare systems in the early 1960s, but now have a different mix of funding mechanisms. Canada's universal single-payer healthcare system covers about 70% of expenditures, and the Canada Health Act requires that all insured persons be fully insured, without co-payments or user fees, for all medically necessary hospital and physician care. About 91% of hospital expenditures and 99% of total physician services are financed by the public sector. In the United States, with its mixed public-private system, 16% or 45 million American residents are uninsured at any one time. The U.S. is one of two OECD countries not to have some form of universal health coverage, the other being Turkey. Mexico established a universal healthcare program by November 2008. The governments of both nations are closely involved in healthcare. The central structural difference between the two is in health insurance. In Canada, the federal government is committed to providing funding support to its provincial governments for healthcare expenditures as long as the province in question abides by accessibility guarantees as set out in the Canada Health Act, which explicitly prohibits billing end users for procedures that are covered by Medicare. While some label Canada's system as "socialized medicine", health economists do not use that term. Unlike systems with public delivery, such as the UK, the Canadian system provides public coverage for a combination of public and private delivery | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Princeton University health economist Uwe E. Reinhardt says that single-payer systems are not "socialized medicine" but "social insurance" systems, since providers (such as doctors) are largely in the private sector. Similarly, Canadian hospitals are controlled by private boards or regional health authorities, rather than being part of government. In the US, direct government funding of health care is limited to Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP), which cover eligible senior citizens, the very poor, disabled persons, and children. The federal government also runs the Veterans Administration, which provides care directly to retired or disabled veterans, their families, and survivors through medical centers and clinics. The U.S. government also runs the Military Health System. In fiscal year 2007, the MHS had a total budget of $39.4 billion and served approximately 9.1 million beneficiaries, including active-duty personnel and their families, and retirees and their families. The MHS includes 133,000 personnel, 86,000 military and 47,000 civilian, working at more than 1,000 locations worldwide, including 70 inpatient facilities and 1,085 medical, dental, and veterans' clinics. One study estimates that about 25 percent of the uninsured in the U.S. are eligible for these programs but remain unenrolled; however, extending coverage to all who are eligible remains a fiscal and political challenge. For everyone else, health insurance must be paid for privately. Some 59% of U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States residents have access to health care insurance through employers, although this figure is decreasing, and coverages as well as workers' expected contributions vary widely. Those whose employers do not offer health insurance, as well as those who are self-employed or unemployed, must purchase it on their own. Nearly 27 million of the 45 million uninsured U.S. residents worked at least part-time in 2007, and more than a third were in households that earned $50,000 or more per year. Despite the greater role of private business in the US, federal and state agencies are increasingly involved, paying about 45% of the $2.2 trillion the nation spent on medical care in 2004. The U.S. government spends more on healthcare than on Social Security and national defense combined, according to the Brookings Institution. Beyond its direct spending, the US government is also highly involved in healthcare through regulation and legislation. For example, the Health Maintenance Organization Act of 1973 provided grants and loans to subsidize Health Maintenance Organizations and contained provisions to stimulate their popularity. HMOs had been declining before the law; by 2002 there were 500 such plans enrolling 76 million people. The Canadian system has been 69–75% publicly funded, though most services are delivered by private providers, including physicians (although they may derive their revenue primarily from government billings) | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Although some doctors work on a purely fee-for-service basis (usually family physicians), some family physicians and most specialists are paid through a combination of fee-for-service and fixed contracts with hospitals or health service management organizations. Canada's universal health plans do not cover certain services. Non-cosmetic dental care is covered for children up to age 14 in some provinces. Outpatient prescription drugs are not required to be covered, but some provinces have drug cost programs that cover most drug costs for certain populations. In every province, seniors receiving the Guaranteed Income Supplement have significant additional coverage; some provinces expand forms of drug coverage to all seniors, low-income families, those on social assistance, or those with certain medical conditions. Some provinces cover all drug prescriptions over a certain portion of a family's income. Drug prices are also regulated, so brand-name prescription drugs are often significantly cheaper than in the U.S. Optometry is only covered in some provinces and is sometimes only covered for children under a certain age. Visits to non-physician specialists may require an additional fee. Also, some procedures are only covered under certain circumstances. For example, circumcision is not covered, and a fee is usually charged when a parent requests the procedure; however, if an infection or medical necessity arises, the procedure would be covered. According to Dr | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Albert Schumacher, former president of the Canadian Medical Association, an estimated 75 percent of Canadian healthcare services are delivered privately, but funded publicly. Frontline practitioners whether they're GPs or specialists by and large are not salaried. They're small hardware stores. Same thing with labs and radiology clinics ... The situation we are seeing now are more services around not being funded publicly but people having to pay for them, or their insurance companies. We have sort of a passive privatization. In both Canada and the United States, access can be a problem. Studies suggest that 40% of U.S. citizens do not have adequate health insurance, if any at all. In Canada, 5% of Canadian citizens have not been able to find a regular doctor, with a further 9% having never looked for one. Yet, even if some cannot find a family doctor, every Canadian citizen is covered by the national health care system. The U.S. data is evidenced in a 2007 Consumer Reports study on the U.S. health care system which showed that the underinsured account for 24% of the U.S. population and live with skeletal health insurance that barely covers their medical needs and leaves them unprepared to pay for major medical expenses. When added to the population of uninsured (approximately 16% of the U.S. population), a total of 40% of Americans ages 18–64 have inadequate access to healthcare, according to the Consumer Reports study. The Canadian data comes from the 2003 Canadian Community Health Survey, In the U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States , the federal government does not guarantee universal healthcare to all its citizens, but publicly funded healthcare programs help to provide for the elderly, disabled, the poor, and children. The Emergency Medical Treatment and Active Labor Act or EMTALA also ensures public access to emergency services. The EMTALA law forces emergency healthcare providers to stabilize an emergency health crisis and cannot withhold treatment for lack of evidence of insurance coverage or other evidence of the ability to pay. EMTALA does not absolve the person receiving emergency care of the obligation to meet the cost of emergency healthcare not paid for at the time and it is still within the right of the hospital to pursue any debtor for the cost of emergency care provided. In Canada, emergency room treatment for legal Canadian residents is not charged to the patient at time of service but is met by the government. According to the United States Census Bureau, 59.3% of U.S. citizens have health insurance related to employment, 27.8% have government-provided health-insurance; nearly 9% purchase health insurance directly (there is some overlap in these figures), and 15.3% (45.7 million) were uninsured in 2007. An estimated 25 percent of the uninsured are eligible for government programs but unenrolled. About a third of the uninsured are in households earning more than $50,000 annually | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States A 2003 report by the Congressional Budget Office found that many people lack health insurance only temporarily, such as after leaving one employer and before a new job. The number of chronically uninsured (uninsured all year) was estimated at between 21 and 31 million in 1998. Another study, by the Kaiser Commission on Medicaid and the Uninsured, estimated that 59 percent of uninsured adults have been uninsured for at least two years. One indicator of the consequences of Americans' inconsistent health care coverage is a study in "Health Affairs" that concluded that half of personal bankruptcies involved medical bills. Although other sources dispute this, it is possible that medical debt is the principal cause of bankruptcy in the United States. A number of clinics provide free or low-cost non-emergency care to poor, uninsured patients. The National Association of Free Clinics claims that its member clinics provide $3 billion in services to some 3.5 million patients annually. A peer-reviewed comparison study of healthcare access in the two countries published in 2006 concluded that U.S. residents are one third less likely to have a regular medical doctor, one fourth more likely to have unmet healthcare needs, and are more than twice as likely to forgo needed medicines. The study noted that access problems "were particularly dire for the US uninsured." Those who lack insurance in the U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States were much less satisfied, less likely to have seen a doctor, and more likely to have been unable to receive desired care than both Canadians and insured Americans. Another cross-country study compared access to care based on immigrant status in Canada and the U.S. Findings showed that in both countries, immigrants had worse access to care than non-immigrants. Specifically, immigrants living in Canada were less likely to have timely Pap tests compared with native-born Canadians; in addition, immigrants in the U.S. were less likely to have a regular medical doctor and an annual consultation with a health care provider compared with native-born Americans. In general, immigrants in Canada had better access to care than those in the U.S., but most of the differences were explained by differences in socioeconomic status (income, education) and insurance coverage across the two countries. However, immigrants in the U.S. were more likely to have timely Pap tests than immigrants in Canada. Cato Institute has expressed concerns that the U.S. government has restricted the freedom of Medicare patients to spend their own money on healthcare, and has contrasted these developments with the situation in Canada, where in 2005 the Supreme Court of Canada ruled that the province of Quebec could not prohibit its citizens from purchasing covered services through private health insurance. The institute has urged the Congress to restore the right of American seniors to spend their own money on medical care | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States The Canada Health Act covers the services of psychiatrists, who are medical doctors with additional training in psychiatry but does not cover treatment by a psychologist or psychotherapist unless the practitioner is also a medical doctor. Goods and Services Tax or Harmonized Sales Tax (depending on the province) applies to the services of psychotherapists. Some provincial or territorial programs and some private insurance plans may cover the services of psychologists and psychotherapists, but there is no federal mandate for such services in Canada. In the U.S., the Affordable Care Act includes prevention, early intervention, and treatment of mental and/or substance use disorders as an "essential health benefit" (EHB) that must be covered by health plans that are offered through the Health Insurance Marketplace. Under the Affordable Care Act, most health plans must also cover certain preventive services without a copayment, co-insurance, or deductible. In addition, the U.S. Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 mandates "parity" between mental health and/or substance use disorder (MH/SUD) benefits and medical/surgical benefits covered by a health plan. Under that law, if a health care plan offers mental health and/or substance use disorder benefits, it must offer the benefits on par with the other medical/surgical benefits it covers. One complaint about both the U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States and Canadian systems is waiting times, whether for a specialist, major elective surgery, such as hip replacement, or specialized treatments, such as radiation for breast cancer; wait times in each country are affected by various factors. In the United States, access is primarily determined by whether a person has access to funding to pay for treatment and by the availability of services in the area and by the willingness of the provider to deliver service at the price set by the insurer. In Canada, the wait time is set according to the availability of services in the area and by the relative need of the person needing treatment. As reported by the Health Council of Canada, a 2010 Commonwealth survey found that 39% of Canadians waited 2 hours or more in the emergency room, versus 31% in the U.S.; 43% waited 4 weeks or more to see a specialist, versus 10% in the U.S. The same survey states that 37% of Canadians say it is difficult to access care after hours (evenings, weekends or holidays) without going to the emergency department compared to over 34% of Americans. Furthermore, 47% of Canadians and 50% of Americans who visited emergency departments over the past two years feel that they could have been treated at their normal place of care if they were able to get an appointment. A 2018 survey conducted by the Fraser Institute found that wait times in Canada for a variety of medical procedures reached "an all-time high | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States " In Canada, unlike in the United States, appointment duration (meeting with physicians) averaged under two (2) minutes. These very fast appointments are a result of physicians attempting to accommodate for the number of patients using the medical system. In these appointments, however, diagnoses or prescriptions were rarely given, where the patients instead were almost always referred to specialists to receive treatment for their medical issues. Patients in Canada waited an average of 19.8 weeks to receive treatment, regardless of whether they were able to see a specialist or not. This is juxtaposed with the average wait times in the United States. In the U.S. the average wait time for a first-time appointment is 24 days (≈3 times longer than in Canada); wait times for Emergency Room (ER) services averaged 24 minutes (more than 4x faster than in Canada); wait times for specialists averaged between 3–6.4 weeks (over 6x faster than in Canada). In the U.S., patients on Medicaid, the low-income government programs, can wait up to a maximum of 12 weeks to see specialists (6 weeks less than the average wait time in Canada). Because Medicaid payments are low, some have claimed that some doctors do not want to see Medicaid patients. For example, in Benton Harbor, Michigan, specialists agreed to spend one afternoon every week or two at a Medicaid clinic, which meant that Medicaid patients had to make appointments not at the doctor's office, but at the clinic, where appointments had to be booked months in advance | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States A 2009 study found that on average the wait in the United States to see a medical specialist is 20.5 days. In a 2009 survey of physician appointment wait times in the United States, the average wait time for an appointment with an orthopedic surgeon in the country as a whole was 17 days. In Dallas, Texas the wait was 45 days (the longest wait being 365 days). Nationwide across the U.S. the average wait time to see a family doctor was 20 days. The average wait time to see a family practitioner in Los Angeles, California was 59 days and in Boston, Massachusetts it was 63 days. Studies by the Commonwealth Fund found that 42% of Canadians waited 2 hours or more in the emergency room, vs. 29% in the U.S.; 57% waited 4 weeks or more to see a specialist, vs. 23% in the U.S., but Canadians had more chances of getting medical attention at nights, or on weekends and holidays than their American neighbors without the need to visit an ER (54% compared to 61%). Statistics from the Canadian free market think tank Fraser Institute in 2008 indicate that the average wait time between the time when a general practitioner refers a patient for care and the receipt of treatment was almost four and a half months in 2008, roughly double what it had been 15 years before. A 2003 survey of hospital administrators conducted in Canada, the U.S., and three other countries found dissatisfaction with both the U.S. and Canadian systems | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States For example, 21% of Canadian hospital administrators, but less than 1% of American administrators, said that it would take over three weeks to do a biopsy for possible breast cancer on a 50-year-old woman; 50% of Canadian administrators versus none of their American counterparts said that it would take over six months for a 65-year-old to undergo a routine hip replacement surgery. However, U.S. administrators were the most negative about their country's system. Hospital executives in all five countries expressed concerns about staffing shortages and emergency department waiting times and quality. In a letter to the "Wall Street Journal", Robert Bell, the President and CEO of University Health Network, Toronto, said that Michael Moore's film "Sicko" "exaggerated the performance of the Canadian health system — there is no doubt that too many patients still stay in our emergency departments waiting for admission to scarce hospital beds." However, "Canadians spend about 55% of what Americans spend on health care and have longer life expectancy and lower infant mortality rates. Many Americans have access to quality healthcare. All Canadians have access to similar care at a considerably lower cost." There is "no question" that the lower cost has come at the cost of "restriction of supply with sub-optimal access to services," said Bell. A new approach is targeting waiting times, which are reported on public websites | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States In 2007 Shona Holmes, a Waterdown, Ontario woman who had a Rathke's cleft cyst removed at the Mayo Clinic in Arizona, sued the Ontario government for failing to reimburse her $95,000 in medical expenses. Holmes had characterized her condition as an emergency, said she was losing her sight and portrayed her condition as a life-threatening brain cancer. In July 2009 Holmes agreed to appear in television ads broadcast in the United States warning Americans of the dangers of adopting a Canadian-style health care system. The ads she appeared in triggered debates on both sides of the border. After her ad appeared critics pointed out discrepancies in her story, including that Rathke's cleft cyst, the condition she was treated for, was not a form of cancer, and was not life-threatening. Healthcare is one of the most expensive items of both nations' budgets. In the United States, the various levels of government spend more per capita than levels of government do in Canada. In 2004, Canada government-spending was $2,120 (in US dollars) per person, while the United States government-spending $2,724. A 1999 report found that after exclusions, administration accounted for 31.0% of healthcare expenditures in the United States, as compared with 16.7% in Canada. In looking at the insurance element, in Canada, the provincial single-payer insurance system operated with overheads of 1.3%, comparing favourably with private insurance overheads (13.2%), U.S. private insurance overheads (11.7%) and U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Medicare and Medicaid program overheads (3.6% and 6.8% respectively). The report concluded by observing that gap between U.S. and Canadian spending on administration had grown to $752 per capita and that a large sum might be saved in the United States if the U.S. implemented a Canadian-style system. However, U.S. government spending covers less than half of all healthcare costs. Private spending is also far greater in the U.S. than in Canada. In Canada, an average of $917 was spent annually by individuals or private insurance companies for health care, including dental, eye care, and drugs. In the U.S., this sum is $3,372. In 2006, healthcare consumed 15.3% of U.S. annual GDP. In Canada, only 10% of GDP was spent on healthcare. This difference is a relatively recent development. In 1971 the nations were much closer, with Canada spending 7.1% of GDP while the U.S. spent 7.6%. Some who advocate against greater government involvement in healthcare have asserted that the difference in costs between the two nations is partially explained by the differences in their demographics. Illegal immigrants, more prevalent in the U.S. than in Canada, also add a burden to the system, as many of them do not carry health insurance and rely on emergency rooms — which are legally required to treat them under EMTALA — as a principal source of care. In Colorado, for example, an estimated 80% of undocumented immigrants do not have health insurance. The mixed system in the United States has become more similar to the Canadian system | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States In recent decades, managed care has become prevalent in the United States, with some 90% of privately insured Americans belonging to plans with some form of managed care. In "managed care", insurance companies control patients' health care to reduce costs, for instance by demanding a second opinion prior to some expensive treatments or by denying coverage for treatments not considered worth their cost. Administrative costs are also higher in the United States than in Canada. Through all entities in its public–private system, the US spends more per capita than any other nation in the world, but is the only wealthy industrialized country in the world that lacks some form of universal healthcare. In March 2010, the US Congress passed regulatory reform of the American "health insurance" system. However, since this legislation is not fundamental "healthcare" reform, it is unclear what its effect will be and as the new legislation is implemented in stages, with the last provision in effect in 2018, it will be some years before any empirical evaluation of the full effects on the comparison could be determined. Healthcare costs in both countries are rising faster than inflation. As both countries consider changes to their systems, there is debate over whether resources should be added to the public or private sector | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Although Canadians and Americans have each looked to the other for ways to improve their respective health care systems, there exists a substantial amount of conflicting information regarding the relative merits of the two systems. In the U.S., Canada's mostly monopsonistic health system is seen by different sides of the ideological spectrum as either a model to be followed or avoided. Some of the extra money spent in the United States goes to physicians, nurses, and other medical professionals. According to health data collected by the OECD, average income for physicians in the United States in 1996 was nearly twice that for physicians in Canada. In 2012, the gross average salary for doctors in Canada was CDN$328,000. Out of the gross amount, doctors pay for taxes, rent, staff salaries and equipment. In Canada, less than half of doctors are specialists whereas more than 70% of doctors are specialists in the U.S. Canada has fewer doctors per capita than the United States. In the U.S, there were 2.4 doctors per 1,000 people in 2005; in Canada, there were 2.2. Some doctors leave Canada to pursue career goals or higher pay in the U.S., though significant numbers of physicians from countries such as China, India, Pakistan and South Africa immigrate to practice in Canada. Many Canadian physicians and new medical graduates also go to the U.S. for post-graduate training in medical residencies. As it is a much larger market, new and cutting-edge sub-specialties are more widely available in the U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States as opposed to Canada. However, statistics published in 2005 by the Canadian Institute for Health Information (CIHI), show that, for the first time since 1969 (the period for which data are available), more physicians returned to Canada than moved abroad. Both Canada and the United States have limited programs to provide prescription drugs to the needy. In the U.S., the introduction of Medicare Part D has extended partial coverage for pharmaceuticals to Medicare beneficiaries. In Canada all drugs given in hospitals fall under Medicare, but other prescriptions do not. The provinces all have some programs to help the poor and seniors have access to drugs, but while there have been calls to create one, no national program exists. About two thirds of Canadians have private prescription drug coverage, mostly through their employers. In both countries, there is a significant population not fully covered by these programs. A 2005 study found that 20% of Canada's and 40% of America's sicker adults did not fill a prescription because of cost. Furthermore, the 2010 Commonwealth Fund International Health Policy Survey indicates that 4% of Canadians indicated that they did not visit a doctor because of cost compared with 22% of Americans. Additionally, 21% of Americans have said that they did not fill a prescription for medicine or have skipped doses due to cost. That is compared with 10% of Canadians. One of the most important differences between the two countries is the much higher cost of drugs in the United States | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States In the U.S., $728 per capita is spent each year on drugs, while in Canada it is $509. At the same time, consumption is higher in Canada, with about 12 prescriptions being filled per person each year in Canada and 10.6 in the United States. The main difference is that patented drug prices in Canada average between 35% and 45% lower than in the United States, though generic prices are higher. The price differential for brand-name drugs between the two countries has led Americans to purchase upward of $1 billion US in drugs per year from Canadian pharmacies. There are several reasons for the disparity. The Canadian system takes advantage of centralized buying by the provincial governments that have more market heft and buy in bulk, lowering prices. By contrast, the U.S. has explicit laws that prohibit Medicare or Medicaid from negotiating drug prices. In addition, price negotiations by Canadian health insurers are based on evaluations of the clinical effectiveness of prescription drugs, allowing the relative prices of therapeutically similar drugs to be considered in context. The Canadian Patented Medicine Prices Review Board also has the authority to set a fair and reasonable price on patented products, either comparing it to similar drugs already on the market, or by taking the average price in seven developed nations. Prices are also lowered through more limited patent protection in Canada. In the U.S., a drug patent may be extended five years to make up for time lost in development | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Some generic drugs are thus available on Canadian shelves sooner. The pharmaceutical industry is important in both countries, though both are net importers of drugs. Both countries spend about the same amount of their GDP on pharmaceutical research, about 0.1% annually The United States spends more on technology than Canada. In a 2004 study on medical imaging in Canada, it was found that Canada had 4.6 MRI scanners per million population while the U.S. had 19.5 per million. Canada's 10.3 CT scanners per million also ranked behind the U.S., which had 29.5 per million. The study did not attempt to assess whether the difference in the number of MRI and CT scanners had any effect on the medical outcomes or were a result of overcapacity but did observe that MRI scanners are used more intensively in Canada than either the U.S. or Great Britain. This disparity in the availability of technology, some believe, results in longer wait times. In 1984 wait times of up to 22 months for an MRI were alleged in Saskatchewan. However, according to more recent official statistics (2007), all emergency patients receive MRIs within 24 hours, those classified as urgent receive them in under 3 weeks and the maximum elective wait time is 19 weeks in Regina and 26 weeks in Saskatoon, the province's two largest metropolitan areas | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States According to the Health Council of Canada's 2010 report "Decisions, Decisions: Family doctors as gatekeepers to prescription drugs and diagnostic imaging in Canada", the Canadian federal government invested $3 billion over 5 years (2000–2005) in relation to diagnostic imaging and agreed to invest a further $2 billion to reduce wait times. These investments led to an increase in the number of scanners across Canada as well as the number of exams being performed. The number of CT scanners increased from 198 to 465 and MRI scanners increased from 19 to 266 (more than tenfold) between 1990 and 2009. Similarly, the number of CT exams increased by 58% and MRI exams increased by 100% between 2003 and 2009. In comparison to other OECD countries, including the US, Canada's rates of MRI and CT exams falls somewhere in the middle. Nevertheless, the Canadian Association of Radiologists claims that as many as 30% of diagnostic imaging scans are inappropriate and contribute no useful information. The extra cost of malpractice lawsuits is a proportion of health spending in both the U.S. (1.7% in 2002) and Canada (0.27% in 2001 or $237 million). In Canada the total cost of settlements, legal fees, and insurance comes to $4 per person each year, but in the United States it is over $16. Average payouts to American plaintiffs were $265,103, while payouts to Canadian plaintiffs were somewhat higher, averaging $309,417. However, malpractice suits are far more common in the U.S., with 350% more suits filed each year per person | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States While malpractice costs are significantly higher in the U.S., they make up only a small proportion of total medical spending. The total cost of defending and settling malpractice lawsuits in the U.S. in 2004 was over $28 billion. Critics say that defensive medicine consumes up to 9% of American healthcare expenses., but CBO studies suggest that it is much smaller. There are a number of ancillary costs that are higher in the U.S. Administrative costs are significantly higher in the U.S.; government mandates on record keeping and the diversity of insurers, plans and administrative layers involved in every transaction result in greater administrative effort. One recent study comparing administrative costs in the two countries found that these costs in the U.S. are roughly double what they are in Canada. Another ancillary cost is marketing, both by insurance companies and health care providers. These costs are higher in the U.S., contributing to higher overall costs in that nation. In the World Health Organization's rankings of healthcare system performance among 191 member nations published in 2000, Canada ranked 30th and the U.S. 37th, while the overall health of Canadians was ranked 35th and Americans 72nd. However, the WHO's methodologies, which attempted to measure how efficiently health systems translate expenditure into health, generated broad debate and criticism. Researchers caution against inferring healthcare quality from some health statistics. June O'Neill and Dave O'Neill point out that ".. | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States life expectancy and infant mortality are both poor measures of the efficacy of a health care system because they are influenced by many factors that are unrelated to the quality and accessibility of medical care". In 2007, Gordon H. Guyatt et al. conducted a meta-analysis, or systematic review, of all studies that compared health outcomes for similar conditions in Canada and the U.S., in "Open Medicine", an open-access peer-reviewed Canadian medical journal. They concluded, "Available studies suggest that health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent." Guyatt identified 38 studies addressing conditions including cancer, coronary artery disease, chronic medical illnesses and surgical procedures. Of 10 studies with the strongest statistical validity, 5 favoured Canada, 2 favoured the United States, and 3 were equivalent or mixed. Of 28 weaker studies, 9 favoured Canada, 3 favoured the United States, and 16 were equivalent or mixed. Overall, results for mortality favoured Canada with a 5% advantage, but the results were weak and varied. The only consistent pattern was that Canadian patients fared better in kidney failure. In terms of population health, life expectancy in 2006 was about two and a half years longer in Canada, with Canadians living to an average of 79.9 years and Americans 77.5 years. Infant and child mortality rates are also higher in the U.S | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Some comparisons suggest that the American system underperforms Canada's system as well as those of other industrialized nations with universal coverage. For example, a ranking by the World Health Organization of health care system performance among 191 member nations, published in 2000, ranked Canada 30th and the U.S. 37th, and the overall health of Canada 35th to the American 72nd. The WHO did not merely consider health care outcomes, but also placed heavy emphasis on the health disparities between rich and poor, funding for the health care needs of the poor, and the extent to which a country was reaching the potential health care outcomes they believed were possible for that nation. In an international comparison of 21 more specific quality indicators conducted by the Commonwealth Fund International Working Group on Quality Indicators, the results were more divided. One of the indicators was a tie, and in 3 others, data was unavailable from one country or the other. Canada performed better on 11 indicators; such as survival rates for colorectal cancer, childhood leukemia, and kidney and liver transplants. The U.S. performed better on 6 indicators, including survival rates for breast and cervical cancer, and avoidance of childhood diseases such as pertussis and measles. The 21 indicators were distilled from a starting list of 1000. The authors state that, "It is an opportunistic list, rather than a comprehensive list." Some of the difference in outcomes may also be related to lifestyle choices | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States The OECD found that Americans have slightly higher rates of smoking and alcohol consumption than do Canadians as well as significantly higher rates of obesity. A joint US-Canadian study found slightly higher smoking rates among Canadians. Another study found that Americans have higher rates not only of obesity, but also of other health risk factors and chronic conditions, including physical inactivity, diabetes, hypertension, arthritis, and chronic obstructive pulmonary disease. While a Canadian systematic review stated that the differences in the systems of Canada and the United States could not alone explain differences in healthcare outcomes, the study didn't consider that over 44,000 Americans die every year due to not having a single payer system for healthcare in the United States and it didn't consider the millions more that live without proper medical care due to a lack of insurance. The United States and Canada have different racial makeups, different obesity rates and different alcoholism rates, which would likely cause the US to have a shorter average life expectancy and higher infant mortality even with equal healthcare provided. The US population is 12.2% African Americans and 16.3% Hispanic Americans (2010 Census), whereas Canada has only 2.5% African Canadians and 0.97% Hispanic Canadians (2006 Census). African Americans have higher mortality rates than any other racial or ethnic group for eight of the top ten causes of death | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States The cancer incidence rate among African Americans is 10% higher than among European Americans. U.S. Latinos have higher rates of death from diabetes, liver disease, and infectious diseases than do non-Latinos. Adult African Americans and Latinos have approximately twice the risk as European Americans of developing diabetes. The infant mortality rates for African Americans is twice that of whites. Unfortunately, directly comparing infant mortality rates between countries is difficult, as countries have different definitions of what qualifies as an infant death. Another issue with comparing the two systems is the baseline health of the patient's for which the systems must treat. Canada has only half the obesity rate that the US system must deal with (14.3% vs 30.6%). On average, obesity reduces life expectancy by 6–7 years. A 2004 study found that Canada had a slightly higher mortality rate for acute myocardial infarction (heart attack) because of the more conservative Canadian approach to revascularizing (opening) coronary arteries. Numerous studies have attempted to compare the rates of cancer incidence and mortality in Canada and the U.S., with varying results. Doctors who study cancer epidemiology warn that the diagnosis of cancer is subjective, and the "reported" incidence of a cancer will rise if screening is more aggressive, even if the "real" cancer incidence is the same. Statistics from different sources may not be compatible if they were collected in different ways | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States The proper interpretation of cancer statistics has been an important issue for many years. Dr. Barry Kramer of the National Institutes of Health points to the fact that cancer incidence rose sharply over the past few decades as screening became more common. He attributes the rise to increased detection of benign early stage cancers that pose little risk of metastasizing. Furthermore, though patients who were treated for these benign cancers were at little risk, they often have trouble finding health insurance after the fact. Cancer survival time increases with later years of diagnosis, because cancer treatment improves, so cancer survival statistics can only be compared for cohorts in the same diagnosis year. For example, as doctors in British Columbia adopted new treatments, survival time for patients with metastatic breast cancer increased from 438 days for those diagnosed in 1991–1992, to 667 days for those diagnosed in 1999–2001. An assessment by Health Canada found that cancer mortality rates are almost identical in the two countries. Another international comparison by the National Cancer Institute of Canada indicated that incidence rates for most, but not all, cancers were higher in the U.S. than in Canada during the period studied (1993–1997). Incidence rates for certain types, such as colorectal and stomach cancer, were actually higher in Canada than in the U.S. In 2004, researchers published a study comparing health outcomes in the Anglo countries | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Their analysis indicates that Canada has greater survival rates for both colorectal cancer and childhood leukemia, while the United States has greater survival rates for Non-Hodgkin's lymphoma as well as breast and cervical cancer. A study based on data from 1978 through 1986 found very similar survival rates in both the United States and in Canada. However, a study based on data from 1993 through 1997 found lower cancer survival rates among Canadians than among Americans. A few comparative studies have found that cancer survival rates vary more widely among different populations in the U.S. than they do in Canada. Mackillop and colleagues compared cancer survival rates in Ontario and the U.S. They found that cancer survival was more strongly correlated with socio-economic class in the U.S. than in Ontario. Furthermore, they found that the American survival advantage in the four highest quintiles was statistically significant. They strongly suspected that the difference due to prostate cancer was a result of greater detection of asymptomatic cases in the U.S. Their data indicates that neglecting the prostate cancer data reduces the American advantage in the four highest quintiles and gives Canada a statistically significant advantage in the lowest quintile. Similarly, they believe differences in screening mammography may explain part of the American advantage in breast cancer. Exclusion of breast and prostate cancer data results in very similar survival rates for both countries. Hsing et al | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States found that prostate cancer mortality incidence rate ratios were lower among U.S. whites than among any of the nationalities included in their study, including Canadians. U.S. African Americans in the study had lower rates than any group except for Canadians and U.S. whites. Echoing the concerns of Dr. Kramer and Professor Mackillop, Hsing later wrote that reported prostate cancer incidence depends on screening. Among whites in the U.S., the death rate for prostate cancer remained constant, even though the incidence increased, so the additional reported prostate cancers did not represent an increase in real prostate cancers, said Hsing. Similarly, the death rates from prostate cancer in the U.S. increased during the 1980s and peaked in early 1990. This is at least partially due to "attribution bias" on death certificates, where doctors are more likely to ascribe a death to prostate cancer than to other diseases that affected the patient, because of greater awareness of prostate cancer or other reasons. Because health status is "considerably affected" by socioeconomic and demographic characteristics, such as level of education and income, "the value of comparisons in isolating the impact of the healthcare system on outcomes is limited," according to health care analysts. Experts say that the incidence and mortality rates of cancer cannot be combined to calculate survival from cancer. Nevertheless, researchers have used the ratio of mortality to incidence rates as one measure of the effectiveness of healthcare | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Data for both studies was collected from registries that are members of the North American Association of Central Cancer Registries, an organization dedicated to developing and promoting uniform data standards for cancer registration in North America. The U.S. and Canada differ substantially in their demographics, and these differences may contribute to differences in health outcomes between the two nations. Although both countries have white majorities, Canada has a proportionately larger immigrant minority population. Furthermore, the relative size of different ethnic and racial groups vary widely in each country. Hispanics and peoples of African descent constitute a much larger proportion of the U.S. population. Non-Hispanic North American aboriginal peoples constitute a much larger proportion of the Canadian population. Canada also has a proportionally larger South Asian and East Asian population. Also, the proportion of each population that is immigrant is higher in Canada. A study comparing aboriginal mortality rates in Canada, the U.S. and New Zealand found that aboriginals in all three countries had greater mortality rates and shorter life expectancies than the white majorities. That study also found that aboriginals in Canada had both shorter life expectancies and greater infant mortality rates than aboriginals in the United States and New Zealand. The health outcome differences between aboriginals and whites in Canada was also larger than in the United States | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Though few studies have been published concerning the health of Black Canadians, health disparities between whites and African Americans in the U.S. have received intense scrutiny. African Americans in the U.S. have significantly greater rates of cancer incidence and mortality. Drs. Singh and Yu found that neonatal and postnatal mortality rates for American African Americans are more than double the non-Hispanic white rate. This difference persisted even after controlling for household income and was greatest in the highest income quintile. A Canadian study also found differences in neonatal mortality between different racial and ethnic groups. Although Canadians of African descent had a greater mortality rate than whites in that study, the rate was somewhat less than double the white rate. The racially heterogeneous Hispanic population in the U.S. has also been the subject of several studies. Although members of this group are significantly more likely to live in poverty than are non-Hispanic whites, they often have disease rates that are comparable to or better than the non-Hispanic white majority. Hispanics have lower cancer incidence and mortality, lower infant mortality, and lower rates of neural tube defects. Singh and Yu found that infant mortality among Hispanic sub-groups varied with the racial composition of that group | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States The mostly white Cuban population had a neonatal mortality rate (NMR) nearly identical to that found in non-Hispanic whites and a postnatal mortality rate (PMR) that was somewhat lower. The largely Mestizo, Mexican, Central, and South American Hispanic populations had somewhat lower NMR and PMR. The Puerto Ricans who have a mix of white and African ancestry had higher NMR and PMR rates. In 2002, automotive companies claimed that the universal system in Canada saved labour costs. In 2004, healthcare cost General Motors $5.8 billion, and increased to $7 billion. The UAW also claimed that the resulting escalating healthcare premiums reduced workers' bargaining powers. In Canada, increasing demands for healthcare, due to the aging population, must be met by either increasing taxes or reducing other government programs. In the United States, under the current system, more of the burden will be taken up by the private sector and individuals. Since 1998, Canada's successive multibillion-dollar budget surpluses have allowed a significant injection of new funding to the healthcare system, with the stated goal of reducing waiting times for treatment. However, this may be hampered by the return to deficit spending as of the 2009 Canadian federal budget. One historical problem with the U.S. system was known as job lock, in which people become tied to their jobs for fear of losing their health insurance. This reduces the flexibility of the labor market | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Federal legislation passed since the mid-1980s, particularly COBRA and HIPAA, has been aimed at reducing job lock. However, providers of group health insurance in many states are permitted to use experience rating and it remains legal in the United States for prospective employers to investigate a job candidate's health and past health claims as part of a hiring decision. Someone who has recently been diagnosed with cancer, for example, may face job lock not out of fear of losing their health insurance, but based on prospective employers not wanting to add the cost of treating that illness to their own health insurance pool, for fear of future insurance rate increases. Thus, being diagnosed with an illness can cause someone to be forced to stay in their current job. More imaginative solutions in both countries have come from the sub-national level. In Canada, the right-wing and now defunct Reform Party and its successor, the Conservative Party of Canada considered increasing the role of the private sector in the Canadian system. Public backlash caused these plans to be abandoned, and the Conservative government that followed re-affirmed its commitment to universal public medicine. In Canada, it was Alberta under the Conservative government that had experimented most with increasing the role of the private sector in healthcare | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Measures included the introduction of private clinics allowed to bill patients for some of the cost of a procedure, as well as 'boutique' clinics offering tailored personal care for a fixed preliminary annual fee. In the U.S., President Bill Clinton attempted a significant restructuring of health care, but the effort collapsed under political pressure against it despite tremendous public support. The 2000 U.S. election saw prescription drugs become a central issue, although the system did not fundamentally change. In the 2004 U.S. election healthcare proved to be an important issue to some voters, though not a primary one. In 2006, Massachusetts adopted a plan that vastly reduced the number of uninsured making it the state with the lowest percentage of non-insured residents in the union. It requires everyone to buy insurance and subsidizes insurance costs for lower income people on a sliding scale. Some have claimed that the state's program is unaffordable, which the state itself says is "a commonly repeated myth". In 2009, in a minor amendment, the plan did eliminate dental, hospice and skilled nursing care for certain categories of noncitizens covering 30,000 people (victims of human trafficking and domestic violence, applicants for asylum and refugees) who do pay taxes. In July 2009, Connecticut passed into law a plan called SustiNet, with the goal of achieving health care coverage of 98% of its residents by 2014 | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States US President Donald Trump has declared his intent to repeal the Affordable Care Act, but has failed to do so, thus far. The Canada Health Act of 1984 "does not directly bar private delivery or private insurance for publicly insured services," but provides financial disincentives for doing so. "Although there are laws prohibiting or curtailing private health care in some provinces, they can be changed," according to a report in the New England Journal of Medicine. Governments attempt to control health care costs by being the sole purchasers and thus they do not allow private patients to bid up prices. Those with non-emergency illnesses such as cancer cannot pay out of pocket for time-sensitive surgeries and must wait their turn on waiting lists. According to the Canadian Supreme Court in its 2005 ruling in "Chaoulli v. Quebec", waiting list delays "increase the patient's risk of mortality or the risk that his or her injuries will become irreparable." The ruling found that a Quebec provincial ban on private health insurance was unlawful, because it was contrary to Quebec's own legislative act, the 1975 Charter of Human Rights and Freedoms. In the United States, Congress has enacted laws to promote consumer-driven healthcare with health savings accounts (HSAs), which were created by the Medicare bill signed by President George W. Bush on December 8, 2003. HSAs are designed to provide tax incentives for individuals to save for future qualified medical and retiree health expenses | https://en.wikipedia.org/wiki?curid=811714 |
Comparison of the healthcare systems in Canada and the United States Money placed in such accounts is tax-free. To qualify for HSAs, individuals must carry a high-deductible health plan (HDHP). The higher deductible shifts some of the financial responsibility for health care from insurance providers to the consumer. This shift towards a market-based system with greater individual responsibility increased the differences between the US and Canadian systems. Some economists who have studied proposals for universal healthcare worry that the consumer driven healthcare movement will reduce the social redistributive effects of insurance that pools high-risk and low-risk people together. This concern was one of the driving factors behind a provision of the Patient Protection and Affordable Care Act, informally known as "Obamacare", which limited the types of purchases which could be made with HSA funds. For example, as of January 1, 2011, these funds can no longer be used to buy over-the-counter drugs without a medical prescription. | https://en.wikipedia.org/wiki?curid=811714 |
Jhai Foundation The is a non-profit organisation working mainly in Laos. One of its projects is bringing communication services to rural communities lacking electricity or telephones. To achieve this goal, they have developed the "Jhai PC and Communication System", a solid state, low energy consuming computer that can be powered by a foot-crank generator built into a bicycle frame or solar energy and uses a wireless network to provide VoIP and Internet services. The JhaiPC runs Linux with a localised version of KDE. The hardware and software design and user documentation for the JhaiPC are completely open and have been released through SourceForge.net. With the minimal communication technology provided by the JhaiPC small businesses, such as farmers in Ban Phon Kam, are able to get better prices for their products. Jhai is also introducing organic farming techniques, fair trade marketing and direct sales to these farmers. | https://en.wikipedia.org/wiki?curid=811722 |
Price look-up code Price look-up codes, commonly called PLU codes, PLU numbers, PLUs, produce codes, or produce labels, are a system of numbers that uniquely identify bulk produce sold in grocery stores and supermarkets. The codes have been in use since 1990, and over 1400 have been assigned. The codes are administered by the International Federation for Produce Standards (IFPS), a global coalition of fruit and vegetable associations that was formed in 2001 to introduce PLU numbers globally. Produce labeled with PLU codes eliminates the need for grocery store checkers and customers to visually identify different varieties, which can make check-out and inventory control easier, faster, and more accuratesomething that is important when varieties of produce look similar but have different prices, such as organic and conventional (non-organic) varieties. PLU codes are used primarily in retail grocery stores or supermarkets, where they are keyed into point of sale systems by cashiers or by customers at self checkout machines when the produce is being weighed or counted. The codes may be printed on small stickers, tags, or bands that are affixed to produce, or may be printed on signs. Since 2006, stickers with PLU codes may also have a GS1 DataBar Stacked Omnidirectional barcode. Non-organic produce is randomly assigned four-digit PLU codes in the 3000 and 4000 series. Organic produce may be designated by prefixing the four-digit, non-organic PLU with a "9". For example, non-organic bananas are 4011, while organic bananas are 94011 | https://en.wikipedia.org/wiki?curid=812527 |
Price look-up code In the future, the 83000 and 84000 series will be used; however, unlike the "9" prefix, the leading "8" will not denote a general category. (At one time, numbers prefixed with "8" were reserved for GMO products, but they were opened for general use after GMO growers didn't use them.) Some PLU code ranges are reserved for retailers. This allows codes to be defined by individual retailers or location, and allows the use of PLU codes in lieu of barcodes. There are retailer-assigned ranges for general and category-specific use. For example, 3170–3269 can be assigned by retailers to any goods, while 4193–4217 can only be assigned to apples. Suppliers may coordinate with their retailers to use the same code in the retailer-assigned range for a specific product. Some producers have obtained a licence to place characters on stickers on PLU code labels, often as a promotion for a movie, television show or other media franchise. For example, Imagination Farms has marketed produce with collectible Disney character stickers such as Toy Story and Finding Nemo under the Disney Garden brand, and Chiquita has marketed bananas with Minions stickers on them, along with a competition. Although the collecting of PLU labels as a hobby already existed for a while, it became widespread through social media presence and fashion designs that use fruit stickers. The popularity of the hobby was further increased by online catalogs and collector clubs | https://en.wikipedia.org/wiki?curid=812527 |
Price look-up code In addition to illustrations, important factors for collectors are compositions of these stickers and the type of product they are used on. Most popular materials for creating PLU code stickers are plastic film and paper, however cardboard, metallized film, wrapping tissue, and textiles are also known to be used. | https://en.wikipedia.org/wiki?curid=812527 |
Efficiency wage In labor economics, the efficiency wage hypothesis argues that wages, at least in some labour markets, form in a way that is not market-clearing. Specifically, it points to the incentive for managers to pay their employees more than the market-clearing wage in order to increase their productivity or efficiency, or reduce costs associated with employee turnover, in industries where the costs of replacing labor are high. This increased labor productivity and/or decreased costs may pay for the higher wages. Because workers are paid more than the equilibrium wage, there may be unemployment, as the above market wage rates will attract more workers. Efficiency wages offer, therefore, a market failure explanation of unemployment, in contrast to theories that emphasize government intervention (such as minimum wages). However, efficiency wages do not necessarily imply unemployment, but only uncleared markets and job rationing in those markets. There may be full employment in the economy, and yet efficiency wages may prevail in some occupations. In this case there will be excess supply for those occupations, but some applicants are not hired and have to work for a probably lower wage elsewhere. The term "efficiency wages" (or rather "efficiency earnings") was introduced by Alfred Marshall to denote the wage per efficiency unit of labor | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage Marshallian efficiency wages would make employers pay different wages to workers who are of different efficiency, such that the employer would be indifferent between more efficient workers and less efficient workers. The modern use of the term is quite different and refers to the idea that higher wages may increase the efficiency of the workers by various channels, making it worthwhile for the employers to offer wages that exceed a market-clearing level. There are several theories (or "microfoundations") of why managers pay efficiency wages (wages above the market clearing rate): The model of efficiency wages, largely based on shirking, developed by Carl Shapiro and Joseph E. Stiglitz has been particularly influential. The shirking model begins with the fact that complete contracts rarely (or never) exist in the real world. This implies that both parties to the contract have some discretion, but frequently, due to monitoring problems, it is the employee's side of the bargain which is subject to the most discretion. (Methods such as piece rates are often impracticable because monitoring is too costly or inaccurate; or they may be based on measures too imperfectly verifiable by workers, creating a moral hazard problem on the employer's side.) Thus the payment of a wage in excess of market-clearing may provide employees with cost-effective incentives to work rather than shirk | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage In the Shapiro and Stiglitz model, workers either work or shirk, and if they shirk they have a certain probability of being caught, with the penalty of being fired. Equilibrium then entails unemployment, because in order to create an opportunity cost to shirking, firms try to raise their wages above the market average (so that sacked workers face a probabilistic loss). But since all firms do this the market wage itself is pushed up, and the result is that wages are raised above market-clearing, creating involuntary unemployment. This creates a low, or no income alternative which makes job loss costly, and serves as a worker discipline device. Unemployed workers cannot bid for jobs by offering to work at lower wages, since if hired, it would be in the worker's interest to shirk on the job, and he has no credible way of promising not to do so. Shapiro and Stiglitz point out that their assumption that workers are identical (e.g. there is no stigma to having been fired) is a strong one – in practice reputation can work as an additional disciplining device. The shirking model does not "predict" (counterfactually) that the bulk of the unemployed at any one time are those who are fired for shirking, because if the threat associated with being fired is effective, little or no shirking and sacking will occur. Instead the unemployed will consist of a (rotating) pool of individuals who have quit for personal reasons, are new entrants to the labour market, or who have been laid off for other reasons | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage Pareto optimality, with costly monitoring, will entail some unemployment, since unemployment plays a socially valuable role in creating work incentives. But the equilibrium unemployment rate will not be Pareto optimal, since firms do not take into account the social cost of the unemployment they help to create. One criticism of this and other flavours of the efficiency wage hypothesis is that more sophisticated employment contracts can under certain conditions reduce or eliminate involuntary unemployment. Lazear (1979, 1981) demonstrates the use of seniority wages to solve the incentive problem, where initially workers are paid less than their marginal productivity, and as they work effectively over time within the firm, earnings increase until they exceed marginal productivity. The upward tilt in the age-earnings profile here provides the incentive to avoid shirking, and the present value of wages can fall to the market-clearing level, eliminating involuntary unemployment. Lazear and Moore (1984) find that the slope of earnings profiles is significantly affected by incentives. However, a significant criticism is that moral hazard would be shifted to employers, since they are responsible for monitoring the worker's effort. Obvious incentives would exist for firms to declare shirking when it has not taken place. In the Lazear model, firms have obvious incentives to fire older workers (paid above marginal product) and hire new cheaper workers, creating a credibility problem | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage The seriousness of this employer moral hazard depends on the extent to which effort can be monitored by outside auditors, so that firms cannot cheat, although reputation effects (e.g. Lazear 1981) may be able to do the same job. On the labor turnover flavor of the efficiency wage hypothesis, firms also offer wages in excess of market-clearing (e.g. Salop 1979, Schlicht 1978, Stiglitz 1974), due to the high cost of replacing workers (search, recruitment, training costs). If all firms are identical, one possible equilibrium involves all firms paying a common wage rate above the market-clearing level, with involuntary unemployment serving to diminish turnover. These models can easily be adapted to explain dual labor markets: if low-skill, labor-intensive firms have lower turnover costs (as seems likely), there may be a split between a low-wage, low-effort, high-turnover sector and a high-wage, high effort, low-turnover sector. Again, more sophisticated employment contracts may solve the problem. In selection wage theories it is presupposed that performance on the job depends on "ability", and that workers are heterogeneous with respect to ability. The selection effect of higher wages may come about through self-selection or because firms faced with a larger pool of applicants can increase their hiring standards and thereby obtain a more productive work force. Self-selection (often referred to as adverse selection) comes about if the workers’ ability and reservation wages are positively correlated | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage There are two crucial assumptions, that firms cannot screen applicants either before or after applying, and that there is costless self-employment available which realises a worker's marginal product (that is higher for the more productive workers). If there are two kinds of firm (low and high wage), then we effectively have two sets of lotteries (since firms cannot screen), the difference being that high-ability workers do not enter the low-wage lotteries as their reservation wage is too high. Thus low-wage firms attract only low-ability lottery entrants, while high-wage firms attract workers of all abilities (i.e. on average they will select average workers). Thus high-wage firms are paying an efficiency wage – they pay more, and, on average, get more (see e.g. Malcolmson 1981; Stiglitz 1976; Weiss 1980). However, the assumption that firms are unable to measure effort and pay piece rates after workers are hired or to fire workers whose output is too low is quite strong. Firms may also be able to design self-selection or screening devices that induce workers to reveal their true characteristics. If firms can assess the productivity of applicants, they will try to select the best among the applicants. A higher wage offer will attract more applicants, and in particular more highly qualified applicants. This permits a firm to raise its hiring standard and thereby enhance the firm's productivity | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage Wage compression makes it profitable for firms to screen applicants under such circumstances, and selection wages may be important. Standard economic models ("neoclassical economics") assume that people pursue only their own self-interest and do not care about "social" goals ("homo economicus"). Some attention has been paid to the idea that people may be altruistic (care about the well-being of others), but it is only with the addition of reciprocity and norms of fairness that the model becomes accurate.(e.g. Rabin 1993; Dufwenberg and Kirchsteiger 2000; Fehr and Schmidt 2000). Thus of crucial importance is the idea of exchange: a person who is altruistic towards another expects the other to fulfil some kind of fairness norm, be it reciprocating in kind, in some other but – according to some shared standard – equivalent way; or simply by being grateful. If the expected reciprocation is not forthcoming, the altruism is unlikely to be repeated or continued. In addition, similar norms of fairness will typically lead people into negative forms of reciprocity too – in the form of retaliation for acts perceived as vindictive. This can bind actors into vicious loops where vindictive acts are met with further vindictive acts. In practice, despite the neat logic of standard neoclassical models, these kinds of sociological models do impinge upon very many economic relations, though in different ways and to different degrees | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage For example, if an employee has been exceptionally loyal, a manager may feel some obligation to treat that employee well, even when it is not in his (narrowly defined, economic) self-interest to do so. It would appear that although broader, longer-term economic benefits may result (e.g. through reputation, or perhaps through simplified decision-making according to fairness norms), a major factor must be that there are noneconomic benefits the manager receives, such as not having a guilty conscience (loss of self-esteem). For real-world, socialised, normal human beings (as opposed to abstracted factors of production), this is likely to be the case quite often. (As a quantitative estimate of the importance of this, Weisbrod's 1988 estimate of the total value of voluntary labor in the US - $74 billion annually – will suffice.) Examples of the negative aspect of fairness include consumers "boycotting" firms they disapprove of by not buying products they otherwise would (and therefore settling for second-best); and employees sabotaging firms they feel hard done by. Rabin (1993) offers three stylised facts as a starting-point on how norms affect behaviour: (a) people are prepared to sacrifice their own material well-being to help those who are being kind; (b) they are also prepared to do this to punish those being unkind; (c) both (a) and (b) have a greater effect on behaviour as the material cost of sacrificing (in relative rather than absolute terms) becomes smaller | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage Rabin supports his Fact A by Dawes and Thaler's (1988) survey of the experimental literature, which concludes that, for most one-shot public good decisions in which the individually optimal contribution is close to 0%, the contribution rate ranges from 40 to 60% of the socially optimal level. Fact B is demonstrated by the "ultimatum game" (e.g. Thaler 1988), where an amount of money is split between two people, one proposing a division, the other accepting or rejecting (where rejection means both get nothing). Rationally, the proposer should offer no more than a penny, and the decider accept any offer of at least a penny, but in practice, even in one-shot settings, proposers make fair proposals, and deciders are prepared to punish unfair offers by rejecting them. Fact C is tested and partially confirmed by Gerald Leventhal and David Anderson (1970), but is also fairly intuitive. In the ultimatum game, a 90% split (regarded as unfair) is (intuitively) far more likely to be punished if the amount to be split is $1 than if it is $1 million. A crucial point (as noted in Akerlof 1982) is that notions of fairness depend on the status quo and other reference points. Experiments (Fehr and Schmidt 2000) and surveys (Kahneman, Knetsch and Thaler 1986) indicate that people have clear notions of fairness based on particular reference points (disagreements can arise in the choice of reference point) | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage Thus for example firms who raise prices or lower wages to take advantage of increased demand or increased labour supply are frequently perceived as acting unfairly, where the same changes are deemed acceptable when the firm makes them due to increased costs (Kahneman et al.). In other words, in people's intuitive "naïve accounting" (Rabin 1993), a key role is played by the idea of entitlements embodied in reference points (although as Dufwenberg and Kirchsteiger 2000 point out, there may be informational problems, e.g. for workers in determining what the firm's profit actually is, given tax avoidance and stock-price considerations). In particular it is perceived as unfair for actors to increase their share at the expense of others, although over time such a change may become entrenched and form a new reference point which (typically) is no longer in itself deemed unfair. Solow (1981) argued that wage rigidity may be at least partly due to social conventions and principles of appropriate behaviour, which are not entirely individualistic in origin. Akerlof (1982) provided the first explicitly sociological model leading to the efficiency wage hypothesis. Using a variety of evidence from sociological studies, Akerlof argues that worker effort depends on the work norms of the relevant reference group. In Akerlof's partial gift exchange model, the firm can raise group work norms and average effort by paying workers a gift of wages in excess of the minimum required, in return for effort above the minimum required | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage The sociological model can explain phenomena inexplicable on neoclassical terms, such as why firms do not fire workers who turn out to be less productive; why piece rates are so little used even where quite feasible; and why firms set work standards exceeded by most workers. A possible criticism is that workers do not necessarily view high wages as gifts, but as merely fair (particularly since typically 80% or more of workers consider themselves to be in the top quarter of productivity), in which case they will not reciprocate with high effort. Akerlof and Yellen (1990), responding to these criticisms and building on work from psychology, sociology, and personnel management, introduce "the fair wage-effort hypothesis", which states that workers form a notion of the fair wage, and if the actual wage is lower, withdraw effort in proportion, so that, depending on the wage-effort elasticity and the costs to the firm of shirking, the fair wage may form a key part of the wage bargain. This provides an explanation of persistent evidence of consistent wage differentials across industries (e.g. Slichter 1950; Dickens and Katz 1986; Krueger and Summers 1988): if firms must pay high wages to some groups of workers – perhaps because they are in short supply or for other efficiency-wage reasons such as shirking – then demands for fairness will lead to a compression of the pay scale, and wages for other groups within the firm will be higher than in other industries or firms | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage The union threat model is one of several explanations for industry wage differentials. This Keynesian economics model looks at the role of unions in wage determination. The degree in which union wages exceed non-union member wages is known as union wage premium and some firms seek to prevent unionization in the first instances. Varying costs of union avoidance across sectors will lead some firms to offer supracompetitive wages as pay premiums to workers in exchange for their avoiding unionization. Under the union threat model (Dickens 1986), the ease with which an industry can defeat a union drive has a negative relationship with its wage differential. In other words, inter-industry wage variability should be low where the threat of unionization is low. Raff and Summers (1987) conduct a case study on Henry Ford’s introduction of the five dollar day in 1914. Their conclusion is that the Ford experience supports efficiency wage interpretations. Ford’s decision to increase wages so dramatically (doubling for most workers) is most plausibly portrayed as the consequence of efficiency wage considerations, with the structure being consistent, evidence of substantial queues for Ford jobs, and significant increases in productivity and profits at Ford. Concerns such as high turnover and poor worker morale appear to have played a significant role in the five-dollar decision. Ford’s new wage put him in the position of rationing jobs, and increased wages did yield substantial productivity benefits and profits | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage There is also evidence that other firms emulated Ford’s policy to some extent, with wages in the automobile industry 40% higher than in the rest of manufacturing (Rae 1965, quoted in Raff and Summers). Given low monitoring costs and skill levels on the Ford production line, such benefits (and the decision itself) appear particularly significant. Fehr, Kirchler, Weichbold and Gächter (1998) conduct labour market experiments to separate the effects of competition and social norms/customs/standards of fairness. They find that in complete contract markets, firms persistently try to enforce lower wages. By contrast, in gift exchange markets and bilateral gift exchanges, wages are higher and more stable. It appears that in complete contract situations, competitive equilibrium exerts a considerable drawing power, whilst in the gift exchange market it does not. Fehr et al. stress that reciprocal effort choices are truly a one-shot phenomenon, without reputation or other repeated-game effects. "It is, therefore, tempting to interpret reciprocal effort behavior as a preference phenomenon."(p344). Two types of preferences can account for this behaviour: a) workers may feel an obligation to share the additional income from higher wages at least partly with firms; b) workers may have reciprocal motives (reward good behaviour, punish bad). "In the context of this interpretation, wage setting is inherently associated with the signalling of intentions, and workers condition their effort responses on the inferred intentions | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage " (p344). Charness (1996), quoted in Fehr et al., finds that when signalling is removed (wages are set randomly or by the experimenter), workers exhibit a lower, but still positive, wage-effort relation, suggesting some gain-sharing motive and some reciprocity (where intentions can be signalled). Fehr et al. state that "Our preferred interpretation of firms’ wage-setting behavior is that firms voluntarily paid job rents to elicit non-minimum effort levels." Although excess supply of labour created enormous competition among workers, firms did not take advantage. In the long run, instead of being governed by competitive forces, firms’ wage offers were solely governed by reciprocity considerations because the payment of non-competitive wages generated higher profits. Thus, both firms and workers can be better off when they rely on stable reciprocal interactions. That reciprocal behavior generates efficiency gains has been confirmed by several other papers e.g. Berg, Dickhaut and McCabe (1995) - even under conditions of double anonymity and where actors know even the experimenter cannot observe individual behaviour, reciprocal interactions and efficiency gains are frequent. Fehr, Gächter and Kirchsteiger (1996, 1997) show that reciprocal interactions generate substantial efficiency gains. However the efficiency-enhancing role of reciprocity is, in general, associated with serious behavioural deviations from competitive equilibrium predictions | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage To counter a possible criticism of such theories, Fehr and Tougareva (1995) showed these reciprocal exchanges (efficiency-enhancing) are independent of the stakes involved (they compared outcomes with stakes worth a week's income with stakes worth 3 months’ income, and found no difference). As one counter to over-enthusiasm for efficiency wage models, Leonard (1987) finds little support for either shirking or turnover efficiency wage models, by testing their predictions for large and persistent wage differentials. The shirking version assumes a trade-off between self-supervision and external supervision, while the turnover version assumes turnover is costly to the firm. Variation across firms in the cost of monitoring/shirking or turnover then is hypothesized to account for wage variations across firms for homogeneous workers. But Leonard finds that wages for narrowly defined occupations within one sector of one state are widely dispersed, suggesting other factors may be at work. Paul Krugman explains how the efficiency wage theory comes into play in a real society. The productivity formula_1 of individual workers is a function of their wage formula_2, and the total productivity is the sum of the individual productivity. Accordingly, the sales formula_3 of the firm to which the workers belong become a function of both employment formula_4 and the individual productivity | https://en.wikipedia.org/wiki?curid=817735 |
Efficiency wage The firm's profit formula_5 is Then we assume that the higher the wage of the workers become, the higher the individual productivity: formula_7. If the employment is chosen so that the profit is maximised, it is constant. Under this optimised condition, we have that is, Obviously, the gradient formula_10 of the slope is positive, because the higher individual productivity the higher sales. The formula_11 never goes to negative because of the optimised condition, and therefore we have This means that if the firm increases their wage their profit becomes constant or even larger. Thus the efficiency wage theory motivates the owners of the firm to raise the wage to increase the profit of the firm. | https://en.wikipedia.org/wiki?curid=817735 |
Economic sociology is the study of the social cause and effect of various economic phenomena. The field can be broadly divided into a classical period and a contemporary one, known as "New economic sociology". The classical period was concerned particularly with modernity and its constituent aspects, including rationalisation, secularisation, urbanisation, and social stratification. As sociology arose primarily as a reaction to capitalist modernity, economics played a role in much classic sociological inquiry. The specific term "economic sociology" was first coined by William Stanley Jevons in 1879, later to be used in the works of Émile Durkheim, Max Weber and Georg Simmel between 1890 and 1920. Weber's work regarding the relationship between economics and religion and the cultural "disenchantment" of the modern West is perhaps most iconic of the approach set forth in the classic period of economic sociology. Contemporary economic sociology may include studies of all modern social aspects of economic phenomena; economic sociology may thus be considered a field in the intersection of economics and sociology. Frequent areas of inquiry in contemporary economic sociology include the social consequences of economic exchanges, the social meanings they involve and the social interactions they facilitate or obstruct | https://en.wikipedia.org/wiki?curid=819720 |
Economic sociology arose as a new approach to the analysis of economic phenomena; emphasizing particularly the role of economic structures and institutions that play upon society, and the influence a society holds over the nature of economic structures and institutions. The relationship between capitalism and modernity is a salient issue, perhaps best demonstrated in Weber's "The Protestant Ethic and the Spirit of Capitalism" (1905) and Simmel's "The Philosophy of Money" (1900). may be said to have begun with Tocqueville's "Democracy in America" (1835–40) and "The Old Regime and the Revolution" (1856). Marx's historical materialism would attempt to demonstrate how economic forces influence the structure of society on a fundamental level. Émile Durkheim's "The Division of Labour in Society" was published in 1922, whilst Max Weber's "Economy and Society" was released in the same year. Contemporary economic sociology focuses particularly on the social consequences of economic exchanges, the social meanings they involve and the social interactions they facilitate or obstruct. Influential figures in modern economic sociology include Fred L. Block, James S. Coleman, Paula England, Mark Granovetter, Harrison White, Paul DiMaggio, Joel M. Podolny, Lynette Spillman, Richard Swedberg and Viviana Zelizer in the United States, as well as Carlo Trigilia, Donald Angus MacKenzie, Laurent Thévenot and Jens Beckert in Europe | https://en.wikipedia.org/wiki?curid=819720 |
Economic sociology To this may be added Amitai Etzioni, who has developed the idea of socioeconomics, and Chuck Sabel, Wolfgang Streeck and Michael Mousseau who work in the tradition of political economy/sociology. The focus on mathematical analysis and utility maximisation during the 20th century has led some to see economics as a discipline moving away from its roots in the social sciences. Many critiques of economics or economic policy begin from the accusation that abstract modelling is missing some key social phenomenon that needs to be addressed. is an attempt by sociologists to redefine in sociological terms questions traditionally addressed by economists. It is thus also an answer to attempts by economists (such as Gary Becker) to bring economic approaches – in particular utility maximisation and game theory – to the analysis of social situations that are not obviously related to production or trade. Karl Polanyi, in his book "The Great Transformation", was the first theorist to propose the idea of "embeddedness", meaning that the economy is "embedded" in social institutions which are vital so that the market does not destroy other aspects of human life. The concept of "embeddedness" serves sociologists who study technological developments. Mark Granovetter and Patrick McGuire mapped the social networks which determined the economics of the electrical industry in the United States. Ronen Shamir analyzed how electrification in Mandatory Palestine facilitated the creation of an ethnic-based dual-economy | https://en.wikipedia.org/wiki?curid=819720 |
Economic sociology Polanyi's form of market skepticism, however, has been criticized for intensifying rather than limiting the economization of society. A contemporary period of economic sociology, often known as "new economic sociology", was consolidated by the 1985 work of Mark Granovetter titled "Economic Action and Social Structure: The Problem of Embeddedness". These works elaborated the concept of embeddedness, which states that economic relations between individuals or firms take place within existing social relations (and are thus structured by these relations as well as the greater social structures of which those relations are a part). Social network analysis has been the primary methodology for studying this phenomenon. Granovetter's theory of the strength of weak ties and Ronald Burt's concept of structural holes are two best known theoretical contributions of this field. Modern Marxist thought has focused on the social implications of capitalism (or "commodity fetishism") and economic development within the system of economic relations that produce them. Important theorists include Georg Lukács, Theodor Adorno, Max Horkheimer, Walter Benjamin, Guy Debord, Louis Althusser, Nicos Poulantzas, Ralph Miliband, Jürgen Habermas, Raymond Williams, Fredric Jameson, Antonio Negri, and Stuart Hall. is sometimes synonymous with socioeconomics | https://en.wikipedia.org/wiki?curid=819720 |
Economic sociology Socioeconomics deals with the analytical, political and moral questions arising at the intersection between economy and society from a broad interdisciplinary perspective with links beyond sociology to political economy, moral philosophy, institutional economics and history. The Society for the Advancement of Socio-Economics (SASE) is an international academic association whose members are involved in social studies of economy and economic processes. The "Socio-Economic Review" was established as the official journal of SASE in 2003. The journal aims to encourage work on the relationship between society, economy, institutions and markets, moral commitments and the rational pursuit of self-interest. Most articles focus on economic action in its social and historical context, drawing from sociology, political science, economics and the management and policy sciences. According to the "Journal Citation Reports", the journal has a 2015 impact factor of 1.926, ranking it 56th out of 344 journals in the category "Economics", 21st out of 163 journals in the category "Political Science" and 19th out of 142 journals in the category "Sociology". The American Sociological Association's Economic Sociology section became a permanent Section in January 2001. According to its website, it has about 800 members. Another group of scholars in this area works as Research Committee in Economy and Society (RC02) within the International Sociological Association | https://en.wikipedia.org/wiki?curid=819720 |
Economic sociology Economic Sociology and Political Economy (ES/PE), founded in 2011, is an online scholarly society that gathers researchers interested in economic sociology and related topics. | https://en.wikipedia.org/wiki?curid=819720 |
The Road to Serfdom (German: "Der Weg zur Knechtschaft") is a book written between 1940 and 1943 by Austrian British economist and philosopher Friedrich Hayek. Since its publication in 1944, "The Road to Serfdom" has been an influential and popular exposition of market libertarianism. It has been translated into more than 20 languages and sold over two million copies (as of 2010). The book has also made a significant impact on twentieth-century conservative and libertarian economic and political discourse, and is often cited today by commentators. "The Road to Serfdom" was to be the popular edition of the second volume of Hayek's treatise entitled "The Abuse and Decline of Reason", and the title was inspired by the writings of the 19th century French classical liberal thinker Alexis de Tocqueville on the "road to servitude". In the book, Hayek "[warns] of the danger of tyranny that inevitably results from government control of economic decision-making through central planning." He further argues that the abandonment of individualism and classical liberalism inevitably leads to a loss of freedom, the creation of an oppressive society, the tyranny of a dictator, and the serfdom of the individual. Hayek challenged the view among British Marxists that fascism (including National Socialism) was a capitalist reaction against socialism. He argued that fascism, National Socialism and socialism had common roots in central economic planning and empowering the state over the individual | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom The book was first published in Britain by Routledge in March 1944, during World War II, and was quite popular, leading Hayek to call it "that unobtainable book", also due in part to wartime paper rationing. It was published in the United States by the University of Chicago Press in September 1944 and achieved great popularity. At the arrangement of editor Max Eastman, the American magazine "Reader's Digest" published an abridged version in April 1945, enabling "The Road to Serfdom" to reach a wider popular audience beyond academics. Writing in the era of the Great Depression, the rise of autocracies in Russia, Italy and Germany, and World War II, Hayek wrote a memo to the director of the London School of Economics, William Beveridge, in the early 1930s to dispute the then-popular claim that fascism represented the dying gasp of a failed capitalist system. The memo grew into a magazine article, and he intended to incorporate elements of the article into a book much larger than "The Road to Serfdom". However, he ultimately decided to write "The Road to Serfdom" as its own book. He sent the manuscript to three American publishing houses, all of them rejecting it. The book was originally published for a British audience by Routledge Press in March 1944 in the United Kingdom. The book was subsequently rejected by three publishers in the United States, and it was only after economist Aaron Director spoke to friends at the University of Chicago that the book was published in the U | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom S by the University of Chicago Press on September 18, 1944. The American publisher’s expectation was that the book would sell between 900 and 3,000 copies. But the initial printing run of 2,000 copies was quickly sold out, and 30,000 copies were sold within six months. , the University of Chicago Press estimated that more than 350,000 copies had been sold. A 20-page version of the book was then published in the April 1945 issue of "Reader's Digest", with a press run of several million copies. A 95-page abridged version was also published in 1945 and 1946. In February 1945, a picture-book version was published in "Look" magazine, later made into a pamphlet and distributed by General Motors. The book has been translated into approximately 20 languages and is dedicated "To the socialists of all parties". The introduction to the 50th anniversary edition is written by Milton Friedman (another recipient of the Nobel Prize in Economics 1976). In 2007, the University of Chicago Press issued a "Definitive Edition", Volume 2 in the "Collected Works of F. A. Hayek" series. In June 2010, the book achieved new popularity by rising to the top of the Amazon.com bestseller list following extended coverage of the book on "The Glenn Beck Program". Since that date, it has sold another 250,000 copies in its print and digital editions | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom Hayek argues that Western democracies, including the United Kingdom and the United States, have "progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past". Society has mistakenly tried to ensure continuing prosperity by centralized planning, which inevitably leads to totalitarianism. "We have in effect undertaken to dispense with the forces which produced unforeseen results and to replace the impersonal and anonymous mechanism of the market by collective and ‘conscious’ direction of all social forces to deliberately chosen goals." Socialism, while presented as a means of assuring equality, does so through "restraint and servitude", while "democracy seeks equality in liberty". Planning, because it is coercive, is an inferior method of regulation, while the competition of a free market is superior "because it is the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority". Centralized planning is inherently undemocratic in Hayek's view, because it requires "that the will of a small minority be imposed upon the people". The power of these minorities to act by taking money or property in pursuit of centralized goals, destroys the Rule of Law and individual freedoms | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom Where there is centralized planning, "the individual would more than ever become a mere means, to be used by the authority in the service of such abstractions as the 'social welfare' or the 'good of the community'". Even the very poor have more personal freedom in an open society than a centrally planned one. "[W]hile the last resort of a competitive economy is the bailiff, the ultimate sanction of a planned economy is the hangman." Socialism is a hypocritical system, because its professed humanitarian goals can only be put into practice by brutal methods "of which most socialists disapprove". Such centralized systems also require effective propaganda, so that the people come to believe that the state's goals are theirs. Hayek argues that the roots of National Socialism lie in socialism, and then draws parallels to the thought of British leaders: The increasing veneration for the state, the admiration of power, and of bigness for bigness' sake, the enthusiasm for "organization" of everything (we now call it "planning") and that "inability to leave anything to the simple power of organic growth" ... are all scarcely less marked in England now than they were in Germany. Hayek believed that after World War II, "wisdom in the management of our economic affairs will be even more important than before and that the fate of our civilization will ultimately depend on how we solve the economic problems we shall then face" | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom The only chance to build a decent world is "to improve the general level of wealth" via the activities of free markets. He saw international organization as involving a further threat to individual freedom. He concluded: "The guiding principle that a policy of freedom for the individual is the only truly progressive policy remains as true today as it was in the nineteenth century." Although Hayek believed that government intervention in markets would lead to a loss of freedom, he recognized a limited role for government to perform tasks for which he believed free markets were not capable: The successful use of competition as the principle of social organization precludes certain types of coercive interference with economic life, but it admits of others which sometimes may very considerably assist its work and even requires certain kinds of government action. While Hayek is opposed to regulations that restrict the freedom to enter a trade, or to buy and sell at any price, or to control quantities, he acknowledges the utility of regulations that restrict legal methods of production, so long as these are applied equally to everyone and not used as an indirect way of controlling prices or quantities, and without forgetting the cost of such restrictions: To prohibit the use of certain poisonous substances, or to require special precautions in their use, to limit working hours or to require certain sanitary arrangements, is fully compatible with the preservation of competition | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom The only question here is whether in the particular instance the advantages gained are greater than the social costs they impose. He notes that there are certain areas, such as the environment, where activities that cause damage to third parties (known to economists as "negative externalities") cannot effectively be regulated solely by the marketplace: Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories, be confined to the owner of the property in question, or to those willing to submit to the damage for an agreed compensation. The government also has a role in preventing fraud: Even the most essential prerequisite of its [the market's] proper functioning, the prevention of fraud and deception (including exploitation of ignorance), provides a great and by no means fully accomplished object of legislative activity. The government also has a role in creating a safety net: There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision. He concludes: "In no system that could be rationally defended would the state just do nothing | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom " Since publication, Hayek has offered a number of clarifications on words that are frequently misinterpreted: , the University of Chicago Press estimated that more than 350,000 copies of "The Road to Serfdom" have been sold. It appears on Martin Seymour-Smith's list of the "100 Most Influential Books Ever Written", and it made "#1" on Human Events: Top Ten Books Every Republican Congressman Should Read in 2006. It was influential enough to warrant mention during the 1945 British general election, when according to Harold Macmillan, Winston Churchill was "fortified in his apprehensions [of a Labour government] by reading Professor Hayek's "The Road to Serfdom"" when he warned in an election broadcast in 1945 that a socialist system would "have to fall back on some form of Gestapo". The Labour leader Clement Attlee responded in his election broadcast by claiming that what Churchill had said was the "second-hand version of the academic views of an Austrian professor, Friedrich August von Hayek". The Conservative Central Office sacrificed 1.5 tons of their precious paper ration allocated for the 1945 election so that more copies of "The Road to Serfdom" could be printed, although to no avail, as Labour won a landslide victory. Political historian Alan Brinkley had this to say about the impact of "The Road to Serfdom": The publication of two books ... helped to galvanize the concerns that were beginning to emerge among intellectuals (and many others) about the implications of totalitarianism | https://en.wikipedia.org/wiki?curid=824889 |
The Road to Serfdom One was James Burnham’s The Managerial Revolution ... [A second] Friedrich A. Hayek’s "The Road to Serfdom" ... was far more controversial—and influential. Even more than Burnham, Hayek forced into public discourse the question of the compatibility of democracy and statism ... In responding to Burnham and Hayek ... liberals [in the statist sense of this term as used by some in the United States] were in fact responding to a powerful strain of Jeffersonian anti-statism in American political culture ... The result was a subtle but important shift in liberal [i.e. American statist] thinking. "The Road to Serfdom" has been the subject of much praise and much criticism. It was placed fourth on the list of the 100 best non-fiction books of the twentieth century compiled by "National Review" magazine, was ranked "#16" in reader selections of the hundred best non-fiction book of the twentieth century administered by Modern Library, and appears on a recommended reading list for the 'libertarian right' hosted on the Political Compass test website. John Maynard Keynes said of it: "In my opinion it is a grand book ... Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement | https://en.wikipedia.org/wiki?curid=824889 |
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