What We Want In An Expert

I’m a big fan of Arnold Kling and Nick Schultz and I think there are a lot of interesting things in this article.

One thing that is nagging at me, though is this:

Perhaps medical services could be delivered by workers with fewer credentials but more rigorous on-the job training… Healthcare providers would be accountable for the quality of their work, not for the certificates hanging on their walls.

When I read that I think of the ways that current healthcare providers are and are not accountable for the quality of their work and wonder at what incremental change might occur on this dimension with the kinds of reforms K&S fantasize about.

Let’ say that people choose their healthcare provider based on reputation, credentials and leave the non-reputational consequences of ‘bad work’ to malpractice insurance and the Reviled Employment Certification Boards.

I’d imagine A&S expect this model to remain intact and might say they’re just enhancing the reputational feedback loop. Perhaps, but I think that, deep down, they really want to dismantle the credentialist evaluation model (ie the “He went to Harvard therefore he’s smart therefore he’s a good doctor therefore I want him for my doctor” model).

I’d like to think about this credentialist problem using a different field I know something more about: financial services.

I’ve actually come to think wages in financial services are high for one simple reason, which I’ll express in the form of a question: “If you had a bunch of money, would you rather pay someone really smart (smarter than you) to manage it or someone not as smart?”

And everything else comes from that. You want someone smart. How do you know he/she is smart? Look at the track record. It’s ok but he’s
pretty smart and convinced you that his record will improve. Okay…  Oh, look! He went to Harvard so he must be smart. Done

Now this smart guy has your money and gets paid really well because he’s smart and you’ve got to lure him away from doctoring, laywering,
physics-ing or whatever and he’s smart so probably figured out a way to screw you just a little bit. Hopefully he can screw some other
people on your behalf now, too!

Now this smart guy makes lots of money so will be happy if the other guys and gals who bring him deals make lots of money, too. They’re
doing most of the “work”, anyway. He mostly just brings the money to the table and evaluates the ideas. Bam! Big banker bonuses are born.

And this smart guy is really rich and really knows his stuff so he gets lots of access to people who don’t know his business that well but thinks what he does is really important and have the power to help/hurt him. And, hey, he’s smart and charming so he spreads the love a bit and these powerful types really trust him now. Bam! Regulatory capture.

And this smart guy seems to have wormed his way into a central part of the financial system. A part that is so critical, we have to have people everyone thinks are the smartest guys in the room.

K&S aren’t likely to change how we evaluate who we think the smartest guys in the room are and that means credentials play a role along with track record.

Even for doctors.


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