The Norman Kember affair has raised an interesting question. If a citizen of a country takes risks, or otherwise makes decisions that are likely to have expensive consequences, in what circumstances should other people be expected to pick up the bill?
Here are some examples of that problem on which reasonable people might differ:
- a peace-campaigner who gets kidnapped in Iraq
- a mountain climber who has to be rescued from a mountain
- a rich businessman who tries to balloon around the world and needs rescuing
- an obese person who seeks treatment for medical conditions resulting from obesity
- a smoker who seeks treatment for medical conditions resulting from smoking
- a liver transplant patient who continues to drink
- a person who chooses to have a child but cannot afford to the expense
- a person who needs expensive fertility treatment to have a child
- a person who wishes to have significant cosmetic surgery
- a marathon runner who gets arthritis and needs physiotherapy
- a car driver who has a road traffic accident
On the one hand, my economic instincts tell me that the economic consequences of our decisions should be visited on us, so that we make decisions that reflect the costs and benefits of our actions. This is not to say that people should not choose to climb mountains or eat sugar, but that they should only do so if they value the benefits more than those decisions will cost. On the other hand, I believe that when people are in desperate circumstances (e.g. being held hostage in Iraq, or needing medical treatment), society has an obligation to provide that help. I am happy to contribute to the treatment of others, knowing that they will contribute if and when I need help.
Part of the solution to this lies in compulsory insurance, either privately or through taxation. Smokers should be (and are) taxed to reflect the cost of their choice. Likewise car drivers are taxed – though perhaps not enough to reflect all the social, environmental and health costs of their choices. This line of reasoning suggests that there might be a case for higher taxes on sugar, mountain climbing boots, running shoes, hot air ballons and other goods or services that on average lead to significant costs for society in the future. Air tickets to Iraq should certainly bear an ‘SAS premium’, to cover the expected costs of having to provide security to people there or mount rescue operations. And perhaps car drivers should be required to have medical insurance to cover their treatment in road traffic accidents?
You may be wondering about the distributional consequences of such a policy: won’t this mean that all these activities are then available only to the rich? Actually, the opposite is true. An increase in the cost of these potentially expensive activities can be made tax-neutral by reducing general taxation such as income tax and VAT which less well-off people pay. This takes less money out of their pockets which they can use, if they wish, to pay the higher prices on sugar, mountain shoes or whatever other dangerous (and hence potentially expensive) hobbies they wish to pursue, or for some other benefit. And raising the price will reduce the total amount of these expensive activities that some people undertake, thereby reducing the overall cost to society and so reducing the total level of taxation for everyone.
So I am glad to have paid for Norman Kember’s release. But I wish he had been forced to buy insurance – either through a tax on air tickets to Iraq, or being required to show he had private insurance for his trip that would pay out if he had to be rescued. Perhaps then he might have thought twice about going in the first place.