James Surowiecki had an interesting piece in last week’s New Yorker describing the endowment effect and the status quo bias and applying them to the current health care debate.  In looking at the endowment effect (when you own something you tend to overvalue it) Surowiecki states:

“What [the endowment effect] suggests about health care is that, if people have insurance, most will value it highly, no matter how flawed the current system. And, in fact, more than seventy percent of Americans say they’re satisfied with their current coverage. More strikingly, talk of changing the system may actually accentuate the endowment effect. Last year, a Rasmussen poll found that only twenty-nine percent of likely voters rated the U.S. health-care system good or excellent. Yet when Americans were asked the very same question last month, forty-eight percent rated it that highly. The American health-care system didn’t suddenly improve over the past eleven months. People just feel it’s working better because they’re being asked to contemplate changing it.”

Surowiecki reviews how the natural tendency to avoid change (the status quo bias) is also playing into the debate.  Surowiecki concludes that for President Obama and those in favor of health care reform “[t]he message. . .should be: if we want to protect the status quo, we need to reform it.”   

You can read the full article at: http://www.newyorker.com/talk/financial/2009/08/31/090831ta_talk_surowiecki