British doctors, for example, work under a contract negotiated between a British version of the AMA and the British government. The government and the providers both have leverage, but the British government is the primary purchaser of services in that country. Salaries are lower since the government exerts pressure on them, as they are paid for out of direct taxation.
I understand that you feel very strongly that student debt for doctors is unjustifiable or too high or something. Student debt is not the main driver (or even a driver) of high salaries among US doctors. The level of their student debt is a completely separate topic.
Anecdotal evidence. My wife has $400,000 in med school debt. She needs a $300,000 salary to afford paying that debt off whilst also maintaining a “good” lifestyle. Med school, residency, etc. were hard and sacrifices were made to go through them. It would not be worth it to go through that without a reasonably high salary.
She’d gladly have gone through the process for a $200,000 a year job. It is certainly the case that highly motivated, highly intelligent people take into account the ability to service med school debt when deciding to become a doctor vs. another going into another field. It is obvious that high med school debt has an effect on the salary needed to attract talent.
David Carr won the Nobel Prize in part for his work questioning the traditional supply/demand view of labor economics. Here is a link to an interesting (to me) paper.
Great example. These doctors face competition from a low- or no-cost private sector. This keeps prices down since every consumer can use the state sector. This is true in many countries w/ state health sectors.
> David Carr won the Nobel Prize in part for his work questioning the traditional supply/demand view of labor economics.
Could you mean David CARD?
https://davidcard.berkeley.edu/
His work of course I know. It is related to the economics of minimum wages. I would not say it questions the traditional supply and demand framework (nor would he say that, I bet), though he does point out an empirical observation which doesn't fit well within that framework.
And no, debt does not affect salaries. It's the other way around - with the potential to make a lot more income, one is willing to get more debt to reach that goal. Higher salaries people cause more demand, and so prices go up.
If debt affected salaries, you'd expect your claim to play out on all fields, which it does not. Higher paying undergrad salaries don't correlate to more debt, for example.
If debt affected salaries, you'd expect your claim to play out on all fields, which it does not.
This is very much wrong! All fields are not equal. No one should expect motivations, forces at a play in one field to necessarily apply to all fields.
Do you think highly intelligent, highly motivated people would take on hundreds of thousands dollars of student loan debt without an expectation of a high enough salary to service that debt while maintaining a good lifestyle? We are talking about people who could go into just about any field. To be able to attract the talent the salaries need to be high enough to service the debt. Without the debt the salary needed to attract that talent would go down.
My wife’s med school debt is $400,000. She needs the $300,000 salary she has to service this debt while living a good lifestyle. That high salary will last the rest of her life and not just for the few years it takes to pay off her debt. If she had no debt the she’d be able to live the same lifestyle making $225,000 per year.
Personally I think it’s naive to think that the debt level doesn’t come into play when determining the salary needed to attract the labor of highly intelligent, highly motivated people. You really think that in the alternate world where the U.S. had free med school and all else was the same that salaries would be the same?
You responded to a point from a previous poster with "In countries with mostly free higher education doctor’s salaries are less on average than in the U.S." as if those doctor low salaries were the result of less debt (which is your argument throughout this thread - that debt makes salaries higher), and I pointed out that this is not unique to doctors, and the costs across all fields don't seem to have debt/salary correlation. Your evidence for your thesis does not hold up outside doctors, and then only for US doctors, so it's hard to believe there is some mystical economic law working only for that sub-case.
>the debt level doesn’t come into play when determining the salary needed to attract the labor of highly intelligent
It does. However your claim is "You really think having several hundred thousand dollars in student loans doesn’t in any way affect salaries?" as if the debt forces employers to pay more. It nearly certainly works the other way - if you are going for a job that pays a lot, you are willing to take on more debt to obtain it. Thus those teaching students how to make so much money are able to charge more for teaching that skill.
This is the exact same causal direction of pretty much any asset. Something is more valued, so people will pay more to obtain it. You're implying the other direction.
>To be able to attract the talent the salaries need to be high enough to service the debt
This again makes little sense as to direction. Quants could get PhDs in STEM (mine is in math, and I have a lto of quant friends) and they make vastly more than all but the highest doctors, yet they don't have all the debt. As the quant field matures (and if it lasts), the cost to obtain training will likely rise.
Not sure what your paper shows, except that which I already claimed: doctors are rare, skilled, and take a long time to make. As such they will get paid a lot because their skills are in demand. This has zero to do with debt - this is exactly supply and demand.
Next, again because of supply and demand, those able to teach people to become doctors realize those doctors will make a lot of money, so they, like all free market actors, will charge what the market will bear. Thus the causation is opposite what you claim - each step in the chain absorbs what the market will bear.
It's not like schools decided to charge far beyond what anyone would pay, and later the wages rose to pay for that debt beyond what people could previously pay. It's more that as wages rose, due to demand, school increased prices to capture what the market would bear to provide those skills.
I think the point others are making is that there is already a surplus of people that want to be doctors and a fixed number of a medical degrees in both scenarios.
If doctors already make more than enough to pay off their medical debt, what would change to make them start accepting lower salaries? It seems that the salary is driven by competition between hospitals (demand ) opposed to what doctors are willing to take. I guess it is possible that doctors without school debt would less actively chase higher salaries, so perhaps there is some small impact there.
That said, it seems by far the best solution is still more doctors, with or without school debt.
