I wrote the other day about the pharmaceutical industry, and the need for a different way of doing business. Sure enough, someone else had the same idea.
And it got me thinking about other innovations that change the incentive to promote or inhibit a particular behavior. One of my favorites is something called a prize-linked savings account. It’s a simple way to get people to save.
The way it works is you get an “prize savings” account that offers 0% interest. BUT, if you deposit $25 in a month (and leave it in), you get entered into a draw to win all the interest that all of those accounts would have made. And you never lose your principle deposit.
It is a great way to promote saving because no one really cares if their account offers them 0.5% but if you had a chance to make $100,000 you might be interested. It is behavioral economics (and social engineering) at it’s best. However, sometimes we try to create a solution without really understanding the problem.
Recently a bill passed that gave RCMP the right to force anyone pulled over at a traffic stop or road block with a breathalyzer. Civil rights activists and lawyers are warning of some bumpy legal challenges ahead. While groups like MADD (Mothers Against Drunk Driving) support this legislation and claim it will save lives.
If we take a cold look at the data it may paint a different picture. Freakonomics looked at something similar regarding child safety seats.
Usually these groups are highly emotionally charged due to the death of a family member, and who could deny a mother’s pain?
According to Stats Canada in 2015, the number of drunk driving offenses was 72,039 (201 in 100,000 people). In other words, less than a quarter of 1 percent of the population engage in this activity. This is a little misleading for two reasons, first this is based on population, not on how many trips are taken in a car. So it shouldn’t be 201 in 100,000 it should be 201 in #trips per 100,000. Secondly 201 are the number of people that got caught, that number could be significantly higher since it’s unlikely that police have pulled over 100% of drunk drivers.
When we want to look at the effectiveness of this new law, we need to know how many people go through at least one checkpoint in Canada every year I suspect it is millions, we also want to know how many trips don’t involve a checkpoint?
Personally I think this is a waste for a number of reasons. First, it will create additional paperwork. Not only in the legal challenges but also any one asked will probably have to be documented. Just like if I get a ticket or warning for speeding, there is still paperwork that needs to be written up.
So we’re going to spend all this time and effort to locate a very small portion of the population.
I don’t think the fear of getting caught enters the minds of drunk drivers. These are not people who make good choices. I think a much better solution is to make drunk drivers forfeit their cars. Period. Don’t have a car? Can’t drink and drive.
Another example was an idea that my friend Hans and I had over drinks one night. Here in Canada we have a two-tiered health care system that costs us millions every year and causes us to bleed talent. It is a two tiered system because the rich can simply go somewhere else and pay for treatment if they need it in a hurry. There is nothing our government can do to stop it, and millions of dollars are leaving the Canadian economy. Canadian doctors who go to the U.S. make more money meaning we are losing talent, and who can blame them with the sky-rocketing cost of education. However most would have preferred to remain in Canada. So how do change the system to reduce these issues?
Allow doctors to spend 50% of their time in private practice.
Allow them to charge whatever they want for services, however require that 50% of those charges be funneled back into the public system. And it shouldn’t matter what the service is. If you want to go to a private clinic for an appendectomy you should be allowed to.
For example, I need an MRI on my knee. Through the regular healthcare system it will take 3 months to get an appointment. The doctor who performs the MRI makes $50 for performing the service. Or I can go to Buffalo two days from now and pay $800 and have it done there. The U.S. doctor makes $800. (In reality less since they need to pay for rent, staff, equipment etc. but you get the idea.)
In the new system, I can go to a clinic here and in three days get it done for the same amount but save the hassle of going to Buffalo. The doctor who does the MRIs in her clinic keeps $400. The other $400 goes back into the public healthcare system. This means Ontario health can now afford another MRI machine speeding up that queue, and because doctors are no longer heading south for greener pastures, they have someone qualified to run it.
In addition I remove myself from the MRI queue opening up a position for someone else. I also get my MRI done in a timely fashion. The physician makes $350 more than she normally would if she could only work in the public system and she has an incentive to stay. And because there are more physicians sticking around, even with 50% of their time in private practice, public health care doesn’t see a reduction in doctor/patient hours.
Obviously this is just a very rough idea, and there would need to be lots of consultation but if we start changing the way we think and innovating we change the way people are incentivized. And if we can do that, we can change the world!