Flashback – (Mis)understanding Insurance

If they learn economics in journalism school, they must quickly forget everything upon graduation. Furthermore, when the facts don't make a compelling story, they resort to the usual tactic of trying to make stories fit their worldview or make things look scarier than they are. Here is a prime example I gave in December 2016.

[As I was reading the transcript of Scott Pelley’s "60 Minutes" interview with House Speaker Paul Ryan, I noticed that he seemed uninterested in hard news or in-depth information so much as he was interested in tripping up the Speaker, trying to put him in a position of disagreeing with his new boss, making one or the other of them look bad, or uncovering something potentially embarrassing.

He asked how often the two speak on the phone and who initiates the conversation. The answers were almost daily and both. No news there. How does he answer the phone? “He doesn’t say, ‘This is the president-elect?’” No. “Have you told him being president is not being CEO of the United States, that the Congress is going to have a say?” 

Instead of asking how the two got together after a contentious election, he asked, “Who apologized to whom?” It’s clear by now that Pelley has no liking or respect for Donald Trump, thinks he is a bully and a racist, and is searching for evidence to back up his views. Better yet, he would like to get Ryan to agree on any point that might make it seem he is of the same opinion.

The silliness and self-serving finally comes to a close, and Pelley asks a number of questions about policy issues. Soon he gets to the details about possible changes to Obamacare and the sniping continues. At one point Pelley says “And women will pay the same as men? That didn’t used to be the case.” This is a question designed to get an answer that will incite outrage. He is trying to get some admission of Republican bias against women, but showing in the process that he does not understand how insurance works and counting on the fact that many Americans don’t either.

Insurance usually works by assessing the risk and charging premiums accordingly. If you have homeowner’s insurance you expect a discount for having a working alarm system. Teen drivers are generally less safe than more experienced drivers, but boys have more accidents than girls. Auto insurance for a young man 16-25 is higher. There is no outrage there. It’s not unusual for companies to charge smokers more for their health insurance benefits. Owners of cars with higher repair costs pay higher premiums. Older cars are cheaper to insure due to the lower replacement cost. Those who don’t drive as many miles sometimes pay lower premiums. Costs of auto and homeowners insurance vary by what part of the country and by the size of the town or city you live in. And since women outlive men and take fewer chances, they pay less for life insurance. Older people pay more, as do those who participate in dangerous hobbies like skydiving or juggling chainsaws.

This all happens without a stir. Everyone seems to understand that certain classes of people are at a higher risk for either the frequency or the size of insurance claims. Hence they should pay more. The ones in the classes with higher premiums don’t like it, but they pay. So why would people be upset that some women, especially those of childbearing age, might have to pay more? That “used to be the case” and it didn’t have anything to do with prejudice or victimization.

Apparently the government and some group of citizens have now decided that charging women more for health insurance can be explained only by prejudice. Everyone must purchase the same insurance for the same cost or there will be an uproar. And Scott Pelley and others in his profession are more than happy to incite and later fan the flames of that uproar, because it makes their job of reporting the news so much easier. Their job is not to inform or to educate; their job is to attract views and clicks. Nothing does that better than a good demonstration or protest, even those grounded in fundamental misunderstanding.]

P.S. I have often said that problems with healthcare costs must be solved on the basis of costs, not by tinkering with health insurance, but that’s for another discussion.

Flashback – Why So Much Bad Advice

[This message was originally posted over six years ago, but since then the dynamic of bad information driving out the good has only gotten stronger with more fake news, advertising weasel words, political spinning, echo-chamber exchanges, media bias and health fads without any scientific basis.]

Why do bad ideas and bad advice seem to persist in a society with easy access to good science? One reason may be the tendency to cling to beliefs then look for evidence to support them, instead of accepting the conclusions of well-designed experiments. In his book The Righteous Mind Jonathan Haidt proposes that feelings and emotions come first, and that most reasoning works to justify rather than to test beliefs, that our “intuitions tend to drive our later reasoning.”  John Stuart Mill presented the same thought more than 150 years ago:  (paraphrasing) the more you argue, even while making clear, rational points, the deeper others dig in to protect long-held beliefs. Adding to the sad situation are the effects of scientists and doctors who would rather become famous as authors or TV stars by promoting popular beliefs than risk challenging them, as they should, with the truth.

One case that comes to mind is the persistent belief that artificial sweeteners are dangerous. Simple research is reassuring, but the belief is ingrained in our culture. The National Cancer Institute states clearly and unequivocally: “There is no clear evidence that the artificial sweeteners available commercially in the United States are associated with cancer risk in humans.” The Mayo Clinic’s view is that “there's no sound scientific evidence that any of the artificial sweeteners approved for use in the U.S. cause cancer or other serious health problems.” So who do Americans trust, these authoritative sources or a Facebook friend who watched some guy in a halloween costume on YouTube with scary stories?

Likewise folk remedies of all kinds continue to circulate. One longstanding belief is that magnetism has magical healing powers, leading people to buy bracelets, insoles and other magnetic devices. This is odd because over the past 15 years the FTC has ordered Magnetic Therapeutic Technologies, among others, to stop advertising magnets as a cure for numerous diseases or even as a pain reliever. No credible evidence exists of healing powers, and none can be claimed in their advertising. One recent well-designed test of such devices confirms this fact concluding: “Wearing a magnetic wrist strap or a copper bracelet did not appear to have any meaningful therapeutic effect, beyond that of a placebo, for alleviating symptoms and combating disease activity in rheumatoid arthritis.” Does that slow the sale of magnetic shoe insoles? – Not for people who don’t let the facts get in the way of a good story, a persuasive ad or a celebrity endorsement.

It’s your money to use as you please. You can save it for college and retirement, give it away to companies selling you magnetic health devices, or even flush it down the toilet. Two of those choices make the same amount of sense, but as Paul Simon sang, “A man hears what he wants to hear and disregards the rest."

Flashback - Discrimination

[Here is a posting from June 2011. The original title was Age Discrimination, but the idea is broader.]

Recent news articles presented the fact that the older unemployed are finding it harder to reenter the workforce. In one television interview a man told the reporter that one company directly admitted to him that he had all the qualifications and experience and if he were 20 years younger, the job would be his. This is not only illegal, but a distinct failure in the dimension of critical thinking. It’s illogical and probably a disservice to the owners and customers of the company.

Consider that until recently it was not unusual for a company to have a turnover rate in the area of 20% - much higher in some cases, slightly lower in others depending on the work.  [Today (2019) it might be higher than that considering the number of job openings available to any disgruntled worker.]

At 20% turnover the company is losing it’s entire workforce, on average, every 5 years.  Even a person 55, who expects to retire no earlier than 62, would have a longer than average tenure.  In any economy it's likely that a 55-year-old would remain a loyal employee for those seven or more years until retirement with a company willing to give him or her a chance.

Furthermore some studies have shown that older workers spend more time on the job, with fewer sick days, no lost time due to maternity leave, fewer interruptions with calls from the daycare or school, etc.  Add in the mentoring potential, and arguments in favor of age discrimination become even weaker.  (Here are links to just a couple of articles supporting this position.) Furthermore, older employees have not grown up with all the technology. Those who are successful have shown that they can learn and adapt on the fly.

A company that ignores these realities exhibits behavior based on unwritten policies, past practices and gut feelings. That is both irrational and not in their own best interests – a failure in the dimension of critical thinking.

Reflect on this:  how many other laws are in place, including all other aspects of illegal discrimination, that would be unnecessary if company executives made sound (critical thinking) decisions instead of letting their prejudices short-circuit their brains?  And how many tax dollars could be saved on the development and enforcement of those laws and regulations if people just acted sensibly?

Everyone Claims to Be a Victim

I read the transcript of a podcast: “Is the media making American politics worse?” It comes from a political journalist who believes all of his colleagues are honorable and hardworking, but “I’m worried we’re failing. I’m worried we’re making American politics worse, not better.” To get a more objective viewpoint he invites a professor of journalism to discuss it with him. The exchange goes as follows.

The crisis is “because everything around us has changed — our business models, the way people read us, the way we compete with each other, the way we’re manipulated — and we’re not keeping up. Instead, we’re getting played by the outrage merchants and con artists and trolls and polarizers who understand this new world better.” Apparently this crisis of trust is not of their own making. It’s someone else’s fault, the trolls and polarizers.

“We’re being used to fracture American democracy, and I don’t think we know how to stop it.”

His guest believes the president is forcing journalists to cover his “nuts” rallies. The host complains that the media run in packs, so if you get a story wrong it has no consequences, because everyone else got it wrong too. They just move on to the next story without any investigation of their own missteps or any feeling of responsibility to make corrections.

They are concerned that the outrageous elbows out the important in news coverage.

Both admit the media is now in the entertainment business which is different from journalism and that “We don’t really have a press corps that takes responsibility for the priority list that it ends up working from. We have journalists who are just reacting to events.”

So we have journalists admitting that when stories come in, it’s their organizations that decide what is news and what is not (the priority list). Despite that, they don’t want to admit any bias. They want to be seen as arbiters of right and wrong, of truth and lies, but this printed exchange of ideas reeks of political bias. More evidence comes out as they comment on their audience: “So on the one hand, we become more important to the people who feel like they are on our side. And we have become less important to the ones who aren’t.” They then go on to agree that those who disagree with them – not on their side – are wrong and that’s what keeps them from doing their jobs.

See how easily they portray themselves as victims. What they write and what they choose to report is out of their control; and there is nothing they can do about it.

Part of this is a responsibility issue with the reporters, and part is a perspective issue with the audience. The media must deal with a crisis of trust and a built-in conflict between the entertainment and journalism sides of the business. But none of it is their fault. The audience is driving them to water down the important with the “new, outrageous, conflict-oriented, secret, interesting” stories that the outrage merchants force them to cover. As for their audience, our lack of perspective, our yearning for the new and outrageous, results in us getting the news we deserve rather than important and meaningful stories. Meanwhile, these journalists portray themselves as victims of the system.

The bottom line is that we can’t expect anyone to watch out for us. The truth is out there somewhere, but to find it we must question everything! The future lies in critical thinking and perspective, with a little responsibility on the side.