By SAURABH JHA
Medical Imaging and the Price of Corn
After the Napoleonic wars, the price of corn in England became unaffordable. The landowners were blamed for the high price, which some believed was a result of the unreasonably high rents for farm land. Economist David Ricardo disagreed.
According to Ricardo, detractors had the directionality wrong. It was the scarcity of corn (the high demand relative to its supply) that induced demand for the most fertile land. That is, the rent did not increase the price of corn. The demand for corn raised the rent. Rent was a derived demand.
Directionality is important. Getting directionality wrong means crediting the rooster for sunrise and blaming umbrellas for thunderstorms. It also means that focusing on medical imaging will not touch healthcare costs if factors more upstream are at play.
Medical imaging is a derived demand. The demand for healthcare induces demand for imaging. Demand is assured by the unmoored extent to which we go for marginal increases in survival.