Rationing isn’t best done by charging for services

A discussion on the Radical Statistics list sent me off looking through some old material.  The cash crisis in the National Health Service has fuelled calls for charges to be introduced, as a way of quelling demand. Charges, however, are not a good way of doing this.

This table was part of a paper I never published – I cannibalised sections for a book, and put the arguments differently.

Normative criteria applied to different forms of rationing


Distributive equity Access for a target population: avoiding errors of exclusion Reducing aggregate demand Selectivity:
avoiding errors of inclusion
Denial of service – closing the doors ?
Rationing by price ?
Filtering/ referral processes ? ?
Eligibility criteria
Priority weighting ? ? ?
Dilution – less service for everyone ? ? ? ?
Deterrence ? ?
Delay – waiting times ? ?


Some of the ratings might be questioned – I think, for example, that there is a case to show that making people wait has bad distributive consequences, not just questionable ones.  The central point to take from this is that there is no reason to suppose that price rationing has any intrinsic superiority over other methods. If anything, it is rather inadequate as an instrument of public policy: it has nothing to prevent inappropriate inclusion or exclusion, and while some people think it’s a fair procedure (which is debatable), it is unlikely to be fair in distribution. Waiting lists and queues are not much better. The two methods of rationing which relate best to most of the criteria are eligibility rules and filtering, such as triage or using referral processes.

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