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Bruce Tix or 2.4 Birds in the Bush?

I’ve been trying to weigh the healthcare reform arguments of those who advocate supporting the current bill (like Nate, who I obviously respect), and those who want to kill it and hold out for something better (like Jane Hamsher, who I also respect). And the other night, two classic examples from rational choice theory suddenly came to mind.

The first: Let’s say you have a front-row ticket to a Bruce Springsteen concert, for which you paid $200, but on the night of the show a scalper outside the venue offers you $1,000 for it. You love Bruce, but you also need a new laptop, so you sell it. Then, walking toward the parking lot, you spot another front-row ticket on the ground. Nobody is around to claim it, so you head back toward the arena, where the same scalper again offers you $1,000 for the second ticket. Do you sell it or go to the show?

From a purely rational choice standpoint, you should sell again. Moments earlier, you valued a front-row ticket less than $1,000. (In fact, you paid $200 for the first ticket, so you actually valued it less than $800.) To value an identical ticket, mere moments later, more than $1,000 is irrational, right? Yet, many people would go to the show with that second ticket: It’s a “freebie,” you still love Bruce, and something about having already profited $800 from the previous sale makes the second $1,000 offer seem less attractive.

The second: You’re on a game show and the host offers you a choice of a guaranteed $500 in cash or a 50/50 chance to win $1,200. The expected value of the first option is $500, whereas the expected value of the second is $600 (half $1,200), meaning the latter is more preferable. Yet people typically opt for the guaranteed payout: They prefer a “bird in hand” instead of two—or in this case, 2.4—in the bush, so to speak. But again, taking the cash in hand is technically the less “rational” option.

Now, these classic rational choice scenarios are not perfectly analogous to a complex policy decision like the biggest health care reform bill in almost half a century. But I submit that opponents of the current legislative compromise are similar to the ticket-finders in the first scenario, whereas proponents of supporting it are like the game show participants in the second. Let me explain.

After the disaster years of the Bush presidency and the awe-inspiring, historic presidential campaign of Barack Obama, progressives of every stripe were excited and emboldened. Nancy Pelosi expanded her majorities in 2008 and, following the Arlen Specter’s 2009 switch, Harry Reid gained his (supposedly) filibuster-proof majority. The sky–or something damn sure close to it–seemed the limit. This was that once-in-two-generations moment long-frustrated progressives had been anticipating for years. Settling for anything less than “real” reform would be a sell-out for progressives, and no price could buy their dreams away. Like the ticket-finder who knows taking the $1,000 is the sensible thing to do, but who has been waiting a long time for concert night to arrive, taking that deal just doesn’t feel right.

Supporters of the compromise are like the game show contests. They emphasize the value of the sure thing, the guaranteed pay out. They say: Take the bird in hand, even if there are two, maybe more, in the bush. Sure, it’s a lower expected payout than the other possibilities–and certainly the originally-considered (public) options–that were on offer. But, they point out, you eliminate the risk of getting nothing done, making zero progress, if you take the bill as it has been brokered. And there are 30 million uninsured and underinsured Americans who desperately need that bird in hand, even if they–and we–might make out better by taking a chance on a better overall deal at some future point.

That said, you can understand the rationality of each side’s arguments—and just as easily see why each thinks the other side is making an irrational choice.

Me? I’m inclined to take the bird in hand. Why?

Well, for one thing, I’m not sure the prospects are 50/50 for getting a bill that includes everything that’s in there right now, plus a Medicare buy-in, or a public option, or prescription drug importation, or the abortion provisions Ben Nelson just eliminated in exchange for his vote–or some combination thereof. And, moving forward, as the unemployment situation forces the president, Congress and the rest of the country to shift their focus to job creation, the possibilities for a healthcare compromise will diminish. In other words, there are not two (or more) birds in the bush.