How much should people be paid for a flash of insight?
September 27th, 2009 | Published in Economics idea | 2 Comments
Suppose you have a flash of insight and discover a way to cure cancer. This idea pops into your head out of nowhere with little or no effort on your part.
To make this simple, let’s assume that your cure uses common food stuffs so you don’t have to go through a protracted drug approval process. As a hypothetical example, let’s assume that you can cure cancer by drinking a mixture of grapefruit and mango juice. To further simplify the process, let’s assume that the cure is 100 per cent effective so that there is no need for trials or fancy statistical analysis. The success of the cure is overwhelmingly obvious.
The benefit you would bring to humanity would be enormous. What should you be paid for your new cure?
I’m going to assume for now that we want to pay you based on the value of what you have produced. The effort was essentially zero so there is no need to think about it at all.
If there was somehow a way to prevent people from copying your simple cure without paying you using a patent of some sort, we could use markets to determine what your cure is worth.
The next best option for many cancer patients would be death so their willingness to pay is going to be quite high. It would be reasonable to expect to be able to charge every patient you cure several thousand dollars. Since there are millions of cancer patients, you could expect to earn many billions of dollars from your cure through the market mechanism.
Is it reasonable to set a price of, say $5,000 per cured person? The people who are cured would definitely receive $5,000 worth of benefit. For a few month’s salary in rich countries, people would avoid a slow and painful death.
September 27th, 2009 at 11:34 pm (#)
My first thought is that it should be as much as the market can bear – if I had cancer, I would be willing to pay however much it was worth to me or however much I could afford to have it cured. I wouldn’t be too interested in how hard it was for you to cure.
However, I see how this could have bad or inefficient outcomes. First, the lucky brainwave person could charge an extremely high price, which means that only the richest could afford it and most of the world would miss out. Alternatively, the person could create almost-slaves by indebting the cancer victims – still better than death, perhaps.
I don’t think there are any “rights” to the profits or to the cure in this situation. If someone with-held the cure or tried to keep the mechanism secret, he or she would be at risk of an angry mob forcibly freeing the secret.
Eric
September 28th, 2009 at 7:38 pm (#)
Eric.
I agree with your points. I’m going to write more posts about this hypothetical cancer cure.