The Humble Economist is a compilation of 21 essays written by Anthony J. (Tony) Culyer, the eminent health economist from the University of York in the United Kingdom. The essays are drawn from both journals and edited books, and re-edited and often shortened by Professor Culyer specifically for this volume to make them more approachable to a general audience. The editors, Richard Cookson and Karl Claxton, also of the University of York, have divided the book into five sections: Social Scientists and Social Science; Extra-Welfarism; Ethics, Need and Equity; Health Policy; and Health Technology Assessment. The book is now freely available to download in standard ebook formats.

The book provides a great service to the field. Many of the essays are from edited books or even discussion papers that are not easily accessible to many readers, and in most cases they have been shortened to make the text a compact 333 pages. While Culyer has done his share of empirical work and data analysis, the book focuses instead on thought pieces. All too often, the key issues addressed in the book, while taught in any good graduate programme, are swept aside as practitioners move onto their careers. This not-so-benign neglect may arise because grant-making bodies are interested only in data analyses. Or it may be that examining underlying precepts raises many uncomfortable issues for economists who are often quick to point out what policy makers should do. Regardless of the case, having the chance to benefit from such a knowledgeable and entertaining writer is an opportunity that should not be missed.

In reading the essays, the overwhelming thought I had was how careful an observer Culyer is. Whole chapters are devoted to the definitions of concepts such as need, equity and efficiency as well as what qualities society should be maximizing and balancing. Particular effort is devoted to what economists can and cannot properly advise to policy makers. These insights turn out to be obvious only after reading the essays. Along the way the reader gets to enjoy lively writing, for example:

The book begins with a note of caution: the social scientist (really, the economist) needs to ‘separate and distance the rational self from the passions that thoughts can provoke’ (p. 4). Such scientists do not have any more basis for providing advice on what policy makers should do than any other citizen. ‘[T]here is nothing in the disciplinary backgrounds of social scientists that entitles them to take on the role of moral evaluators of the worthiness or unworthiness of the desires of others’ (p. 8). What matters, instead, is ferreting out the values of the policy makers (who have been elected or appointed for that purpose) so they can have the best data to inform their opinions. ‘While social scientists have no legitimacy to settle such questions on behalf of society, they can often shed light on them to the benefit of those who wrestle with such matters…’ (p. 11).

Culyer, consistent with the allusion to humility in the title of the book, spends a full page listing his ‘personal moral failures’ in this regard, for example, ‘I do not know … how far I may morally sacrifice the meeting of my children's needs for the sake of other people's children's need, particularly if I do not know them personally, or they are far away, and there is the possibility that these others would feel no general reciprocal obligation towards my own children’ (p. 12). These failings are, one suspects, universal and illustrate that the economist must understand the nature of his or her very limited role.

The hubris of (some) economists is a central theme of the first part of the book. An example is the economist who claims that markets, as shown by theory, are efficient – because if there are strong enough preferences to change the status quo, it would automatically happen to bring about a better state of affairs. Such economists often also believe that on the face of it, government is inefficient. Culyer here brings forth Dr Pangloss (a satire on the idea that this is the best of all possible worlds), arguing persuasively that if one buys the argument that markets are efficient because there remain no possible gains from trade, then the public sector is equally efficient – or it would have been changed. ‘Most conservative economists are not conservative enough: their presumption that merely the market is efficient is not enough. The public sector is efficient too. Everything is efficient. Everything is wonderful!’ (pp. 36–37), he writes, channeling Dr Pangloss.

There are a myriad of assumptions that must be met (but aren't) in the health care sector to believe that competitive markets lead to the most efficient outcome. When they are not met, theory provides no basis for believing that reliance on markets vs public sector will be superior (Rice, Reference Rice1997). But as Culyer writes, if you believe that markets are de facto efficient,

Like the editors, one of my favorite chapters was the fourth, written with Canadian health economist Robert Evans, ‘Mark Pauly on Welfare Economics: Normative Rabbits from Positive Hats’. While the authors use Pauly as a foil and hope that the thinking they criticize is a ‘minority view even among economists’ (p. 46), this seems overly optimistic. The basis of the essay is Hume's Law, which dates back almost 300 years and states that you cannot derive ‘ought’ conclusions from ‘is’ propositions. They quote Pauly:

Culyer and Evans find these statements wrong, not only because of their logical problems but also because to the lay person, they imply that theory has something to say about the way an economy is organized that it has no legitimacy in saying. But they have another concern: such statements put observed consumer preferences on a pedestal above the pedestrian concept of health status, which, as argued in much of the rest of the book, provides a superior metric of human welfare in health care. This metric goes under the rubric of ‘extra-welfarism’.

Welfare economics bases measurement of social welfare solely on consumer demand. Extra-welfarism, instead, posits that there is more to social good than what people's observed demand behaviour is assumed to reveal about what they prefer. Needless to say, there are a large array of other qualities that can be considered, including such things as freedom, human rights, dignity and equality. In our field, evaluating social welfare through improving health status or access to health care services are prime examples of the extra-welfarist viewpoint.

Culyer lists four ways in which extra-welfarism differs from the conventional approach: (1) it considers outcomes other than subjective utility (albeit, common alternative outcomes such as quality-adjusted life years (QALYs), are also based on subjective judgements), (2) these outcomes can be appropriately evaluated by those other than the person affected, such as an appointed government decision maker, (3) outcomes can be weighted by factors other than preferences [‘decision-makers, wise women, the general public, an elected or appointed committee, a citizens’ jury, or some other organ’ (pp. 76–77)] and (4) ‘it permits interpersonal comparisons of well-being in a variety of dimensions, thus enabling movement beyond Paretian economics’ (p. 72).

There are really three problems with relying solely on subjective utilities or preferences. One is that they may be wrong: the field of behavioural economics, as applied to health, is about how people often do not make decisions that in their best health-related interest. A second is that they are narrow; health is not an explicit element. Third, the welfarist view ignores the quality of preferences. Culyer notes that ‘welfarists do not usually enquire as to how these preferences may have come about nor do they judge them on grounds of decency, ethics, aesthetics or anything else’ (p. 69).

What, then, can we do with the concept of extra-welfarism? The main answer in the book is that we should seek to achieve outcomes that improve health. And why is health important? In Culyer's view, it is to allow a person to ‘flourish’.

Flourishing is an indirect end. Obtaining (as he later argues) cost-effective health care services can improve health, and this in turn allows a person to better be able to achieve his or her life goals – to flourish. Receipt of such care, of course, is not necessarily concordant with individual preferences. There was a great deal of controversy in the United States when the US Preventive Services Task Force recommended in 2009 that women aged 40–49 do not receive regular mammograms, as such services have not been found to be cost-effective and can cause some harm. And sometimes people do not want cost-effective care (e.g. disappointingly low rates of children's vaccination). One can tell a story that a person who eats fattening junk food in excess and is morbidly obese is simply maximizing utility – it is not a particularly convincing story, however. It reminds me of Gary Becker and Kevin Murphy's (Reference Becker and Murphy1988) paean to the absolute sovereignty of preferences: ‘addictions, even strong ones, are usually rational in the sense of involving forward-looking maximization with stable preferences’ (p. 675). But if so, then any behaviour is rational, and the concept is stripped of all meaning.

In contrasting the welfarist vs extra-welfarist viewpoints, Culyer provides a service to the profession through an excellent discussion about ‘what's different about health’, a question that inevitably comes up in health economics courses. This 20-page discourse (pp. 83–104) alone is worth the price of admission. To summarize, the differences relate to ‘consumer rationality, the purity of the agency relationship, the nature of externalities …, the extent of adverse selection, moral hazard, supplier-induced demand, unnecessary premium loading under insurance and the empirical validity of the neoclassical behavioural model …’ (p. 104). We later learn that health, like education, is a good ‘about whose distribution people are particularly concerned’ (p. 155).

The discussion of extra-welfarism opens up the issues that occupy him in the remainder of the book: need, equity, cost-effectiveness and policy-making. Conveniently for us, he sums up many of his conclusions in two sentences:

One important implication he draws from this is that initial or diagnostic assessments should be provided as cheaply as possible. People can reap major benefits from such services, they are often more cost-effective than curative care, and their near-free provision is consistent with societal beliefs that ability of pay should not impair individuals from seeking care.

This is probably a good place to point out that Culyer loves constructing lists. There are many among the various essays, with my favorite being two lists of slogans – bad ones (e.g. ‘Access and utilization of health care ought to be equal for all members of society’) and good ones (e.g. ‘Access should be as cheap as is necessary to enable utilization of needed health care’) – in Chapter 11. The gist of the nine slogans that he devises and anoints as good ones is that only health care that is needed should be substantially subsidized so as to ensure its appropriate utilization; great priority should be put on health differentials between individuals and groups, with the most effort being put on mitigating the grossest disparities so as to ensure that currently disadvantaged populations are better able flourish; and that the public sector should ensure a sufficient information base to intelligently tackle these problems.

Indeed, health policy issues constitute the latter half of the book. Some of the issues chosen were very specific to the National Health Service and the National Institute for Health and Clinical Excellence (NICE), an enterprise that Culyer has been involved in from its inception, serving as founding vice chair and chair of the research and development committee. Others, however, are more general and applicable to health policy worldwide. I want to point out one quotation in Chapter 12 that nicely sums up many of the arguments he makes throughout. In stating that efficiency and equity in health care provision and distribution of services are both essential and not contradictory concepts, he writes:

This issue is certainly not cut and dried, as people can flourish even without good health (e.g. paralympians). Human ability to adapt to circumstances is strong, and health deficits are not inconsistent with being able to flourish. While we know a great deal (but probably not enough) about the relationship between health and health care, much more research is necessary on the relationship between flourishing or thriving, and health.

There is one chapter in this part of the book that deserves special attention: Chapter 14: ‘The Internal Market and Demand-Side Socialism: An Acceptable Means to a Desirable End’. [The notes indicate that this gem is tucked away in a discussion paper (no. 67, 1990) put out by the Centre for Health Economics at the University of York.] This essay contains the strongest policy conclusions in the book and the arguments that he uses in support are worth reading.

As part of his demand-side socialism, Culyer argues that

• • Competition between insurers is a bad idea, for several reasons: people have to pay a ‘loading cost’, it reduces economies of scale, some insurers may enjoy monopolistic power, adverse selection can raise prices, there is a real potential for fraud and there are often gaps in coverage when it is based on employment or ability to pay.

• • Rather, government should take advantage of its monopsonistic power to control health care prices.

• • In contrast, competition among suppliers is necessary to erode monopolistic power.

• • Access to care (allowing the prospect of flourishing) should be determined only by need (or stated in the current popular way, should not be related to zipcode).

• • Fee-for-service is the wrong way to pay providers, rewarding input rather than output and encouraging provision of too many services.

The National Health Service has, over time, gravitated to exactly this strategy. After reading these essays, it becomes vividly clear that this rare economist has had an extraordinary influence on his students, professional peers and national and international health care policy.