We have benefited from conversations with Archon Fung, Brian Jacob, Todd Pittinsky, Peter Schuck, Ani Satz, Andrew Williams, and students in a joint class on statistics and ethics at the John F. Kennedy School of Government in October 2002. We are also grateful to our audience at the conference “The Priority of Practice,” organized by Jonathan Wolff at University College London in September 2003, and to Arthur Applbaum, Miriam Avins, Frances Kamm, Simon Keller, Frederick Schauer, Alan Wertheimer, and the Editors (...) of Phi- losophy & Public Affairs for insightful comments. We have benefited from prepublication reading of Schauer’s work on profiling, Profiles, Probabilities, and Stereotypes (Cambridge, Mass: Harvard University Press, 2003). We thank Avedis Koutoujian for research assistance. (shrink)

Ordeals are burdens placed on individuals that yield no benefits to others; hence they represent a dead-weight loss. Ordeals – the most common is waiting time – play a prominent role in rationing health care. The recipients most willing to bear them are those receiving the greatest benefit from scarce health-care resources. Health care is heavily subsidized; hence, moral hazard leads to excess use. Ordeals are intended to discourage expenditures yielding little benefit while simultaneously avoiding the undesired consequences of rationing (...) methods such as quotas or pricing. This analysis diagnoses the economic underpinnings of ordeals. Subsidies for nursing-home care versus home care illustrate. (shrink)