Health and Education: The India Solution

From Tim Harford of the Financial Times:

Take the doctors of Delhi, who were studied carefully by two World Bank researchers, Jishnu Das and Jeffrey Hammer. These doctors are busy people – the average household visits a doctor every two weeks, and the poor are particularly likely to visit. And, surprisingly, three-quarters of those visits are to private practitioners – despite the fact that public-sector doctors are better qualified. Why?

Das and Hammer tested the competence and the practices of a sample of doctors by sending observers to sit in their surgeries. They discovered that “under-qualified private-sector doctors, although they know less, provide better care on average than their better-qualified counterparts in the public sector”. This is not particularly mysterious, because private-sector doctors don’t get paid unless they can convince their patients that they’re doing a decent job. Public-sector doctors draw salaries and, if they are held accountable at all, it is through indirect channels.

I couldn't ask for better evidence against medical practice licensing. By limiting the market to only those who are "qualified" we deprive everyone, rich and poor, of access to cheaper, better care. By taking a hands off approach to the health care market, India has proven that profit motive works for everyone.

This argument extends to education as well:

A professor of education at the University of Newcastle, Tooley first encountered private schooling for the poor while exploring the slums of Hyderabad, again in India. It took little more than Tooley’s curiosity to unearth a network of 500 private schools, typically charging less than $3 a month, and providing an education of sorts to thousands of children from very poor families. Many of the poorest children were on scholarships, educated for free by school owners with an eye on their standing in the local community.

Tooley has since gone on to catalogue cheap private schools for the poor across the world, and has also tested their quality. His research team discovered more committed teachers, and better provision of facilities such as toilets, drinking water, desks, libraries and electric fans. Most importantly of all, the children were learning more.

I love free markets precisely because they help poor people far more than a government program ever could.