Elasticity of Demand

Listening to the Senate debating health care reform. The thought occurs to me that the health-care/insurance marketplace is really two overlapping industries. That creates deeper complexity since some interests are in conflict.

There are some marketplaces that conform to the theory I learned in Econ 101, i.e. price controls through competition. But some markets do not fit the model, i.e. health-care, education, perishable food. These markets exhibit little change in demand with change in price. This is because these items are not merely desirable, they are a requirement for survival (at a decent level). Economists refer to this kind of relationship between price and demand as the elasticity of demand. But I would imagine that prices in the insurance market place are highly elastic -- e.g. what's your life worth? Who knows? It's just a matter of what the salesman can convince me of, uh?

...guess I skipped that class.

Wisdom

Wisdom: the ability to appreciate the difference between knowledge of good and evil, knowledge that is good, and knowledge that is evil.
-- Michael Masiak, 2009