Economics Links, 5/26/2025

Yascha Mounk on European living standards; Allison Schrager on copying bad European economic ideas; Bruce D. Meyer and Angela Wyse on health insurance; Charles Fain Lehman on temptation goods

Note: Virginia Postrel and I will be discussing The Technological Republic on Friday, May 30, at noon New York time, on Zoom. Free, but registration required.

Yascha Mounk writes,

Eating out is far less common in Europe, where there is a smaller number of restaurants per capita, and the percentage of income people are able to devote to eating out is significantly lower.

When the GDP data purport to show that America is much richer than Europe, people usually pooh-pooh the GDP data. But Mounk says that anecdata say the same thing.

This issue seems to me to be important and under-discussed. Why do people not want to believe what the GDP data are telling them?

When a development as striking as the economic divergence between Europe and America is so little known or discussed by the broader public, the reason is usually that it discomfits the narrative of all kinds of different constituencies.

Allison Schrager writes,

Think about it. They want us to consume less and buy more high-quality domestic goods. They want a bigger welfare state that covers the middle class. They want antitrust to take down big tech. And they want a smaller, slower-growing economy to benefit a small group of people who represent the past. All so European! Even MAHA feels a little Euro with their obsession with artificial food. What’s next? Tethered bottle caps?

She says that the economic ideas of the New Right would make us more like Europe. Have a nice day.

Bruce D. Meyer and Angela Wyse write,

We find that expansions increased Medicaid enrollment by 12 percentage points and reduced the mortality of the low-income adult population by 2.5 percent, suggesting a 21 percent reduction in the mortality hazard of new enrollees. Mortality reductions accrued not only to older age cohorts, but also to younger adults, who accounted for nearly half of life-years saved due to their longer remaining lifespans and large share of the low-income adult population. These expansions appear to be cost-effective, with direct budgetary costs of $5.4 million per life saved and $179,000 per life-year saved falling well below valuations commonly found in the literature. Our findings suggest that lack of health insurance explains about five to twenty percent of the mortality disparity between high- and low-income Americans. We contribute to a growing body of evidence that health insurance improves health and demonstrate that Medicaid’s life-saving effects extend across a broader swath of the low-income population than previously understood.

A lot of earlier research, including a famous RAND study, found no effect of health insurance on health. If newer findings are turning this around, that is something to which we need to pay attention.

Charles Fain Lehman writes

Temptations, in other words, create a dissonance between our present and future selves. What is good for the one is not necessarily good for the other. This is different from other goods. I both want to ride a bicycle, and I want my future self to ride a bicycle too. But while I might want the cake today, I wish my future self would abstain.

…On the right, free-market libertarianism regards the regulation of temptation as anti-capitalistic nanny statism. Unrestrained markets tend to increase consumer welfare; why should the state decide what consumers consume? Moreover, isn’t part of being a free American choosing our risks?

Those on the left are theoretically more willing to regulate. But they are wary of making judgements about individuals’ self-control. It’s fine to talk about big business preying on the poor, but the problem with people buying Coachella tickets on credit is not that they’re poor. It’s that they’re irresponsible—a normative judgment many progressives are unwilling to make.

…prohibition gets a bad rap. Capital-P Prohibition probably worked for alcohol, with research finding it significantly reduced cirrhosis and casting doubt on the idea that it increased violence. And small-p prohibition certainly works to reduce the availability of hard drugs like fentanyl and methamphetamine. The old prohibitionist status quos for sports gambling and pot seem pretty reasonable against the new free-for-alls.

Libertarianism assumes a single, unified self. The conflict between a present self and a future self makes things complicated.

substacks referenced above:

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Anchored expectations

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The Great Divergence