With these motivations, McArdle does her very best to destroy the study and the reputation of Elizabeth Warren. (She does not mention the other authors of the study; Warren received all of her criticism.) McArdle does this by insisting that Warren is trying to deceive journalists in particular and the public in general to advance her national health care agenda.
I am mad, first of all, because Elizabeth Warren is not a third-year
statistically illiterate policy analyst at a health care advocacy group. She's a
professor at Harvard, and the head of the Congressional TARP oversight panel.
This conveys a certain responsibility to present data in the most illuminating
way, not in the way that will induce journalists to say things that aren't true.
And they have done just that. Read a sampling of the stories about this
study on Google News. It's clear that none of the authors of the stories I've
read understand that we're talking about a smaller absolute number of medical
bankruptcies, representing a larger proportion of a much smaller overall
number: that this increase in the proportion could at least as easily have
been driven by less need for non-medical bankruptcy, than by bigger, scarier
medical bills. Indeed, many of the stories indicate that medical bankruptcies
have risen since 2001, which is not true even according to Warren's figures.
I submit that the study is designed to get that result from journalists.
Readers have responded that my criticism is out of line, because after all, they
only talk about the proportion, so who am I to say they're misleading the
McArdle seems to think that a study with a particular aim, as decided and implemented by the PNHP, should have had a different aim, chosen by McArdle. The fact that it did not have a totally different focus of study than the one McArdle would have chosen to study is ample proof to McArdle that Warren is a dishonest hack.
I submit that the study is designed to get that result from journalists. Readers have responded that my criticism is out of line, because after all, they only
talk about the proportion, so who am I to say they're misleading the readers?
Yes, but why do they only talk about the proportion? In general,
economics papers talk about absolute numbers whenever they can, and use
proportions only when things like changes in income and inflation make
comparisons between years too difficult. I submit that we want to know, not
whether medical bankruptcies are a bigger or smaller proportion of overall
bankruptcies, but whether more people are being pushed into bankruptcy by their
medical bills. To take the extreme absurd case, if only one person had
declared bankruptcy in 2007, but that one person had had huge medical bills,
would this be a sign that we need national health care?
We can measure the absolute number of medical bankruptcies, and the changes in income, GDP, and population between 2005 and 2007 were too small to much affect these. Therefore, the appropriate measure was the absolute number. The proportion would have been an interesting inclusion. And it would have been the basis for a different, fascinating study: the relative "stickiness" of medical bankruptcies. But it was not the obvious choice if you are going to use one or the other. That is, unless you are determined to give the impression that rising medical bills are pushing ever-more people into bankruptcy.
Warren's defenders in my comments seem to think that this is simply libertarian bluster--after all, what we're concerned about is whether medical bills are driving the post 2005 increase. But, as Warren surely knows, it is very unlikely that medical bills are driving either the post-2005 increase in bankruptcies, or a post 2005 increase inmedical bankruptcies.
McArdle then goes into a long digression on number of bankruptcies, an utterly irrelevant sideshow meant to obscure her past mistakes and divert the direction of the conversation to the direction in which she wants it to go. She even throws in a chart, which is deep scholarship for McArdle. However the study also addresses the change in bankruptcy law, and how it might affect their study.
Changes in the Law
Between our 2001 and 2007 surveys, Congress enacted
the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which
instituted an income screen and procedural barriers that made filing more
difficult and expensive. The number of filings spiked in mid-2005 in
anticipation of the new law, then plummeted. Since then, filings have increased
each quarter. They are likely to exceed one million households in 2008,
representing about 2.7 million people. BAPCPA’s effects appear nonselective.
Current filers differ from past ones mainly in having struggled longer with
their debts.7 New restrictions fall equally on medical and nonmedical
bankruptcies, with no preferences for medical debts or sick debtors. It is
implausible to ascribe the growing predominance of medical causes of bankruptcy
Conversely, there is ample evidence that the financial burden
of illness is increasing. The number of under-insured increased from 15.6
million in 2003 to 25.2 million in 2007.3 Of low- and middle-income households
with credit card balances, 29% use credit card borrowing to pay off medical
expenses over time.8 Collection agencies contacted 37.2 million Americans about
medical bills in 2003.9 Between 2005 and 2007, the proportion of nonelderly
adults reporting medical debts or problems paying medical bills rose from 34% to
More evidence that she's either a liar or unable to read. McArdle checks her gut again and it tells her that Warren just can't be right.
Now, I find Warren, et. al's results fairly implausible. Bankruptcy, as they themselves note, is an incredibly delicate topic, and the refusal rate on
surveys is high. I would not be surprised to find that they'd gotten a sample
heavily weighted towards people who had problems with medical bills, because
people with more personal and possibly less sympathetic problems, like divorce
and addiction, would presumably be less willing to chat about those.
These are unbelievable dishonest statements. Does she not know that in a bankruptcy you are required to state all of your assets and debts? Does she think that saying "I would not be surprised to find" is an adequate response to statistics? The study states:
As with any survey, we depend on respondents’candor. However, we also had
independent checks—from court records filed under penalty of perjury—on many
responses. Because questionnaires and court records were available for our entire sample, we used them for most calculations. The lowest plausible estimate of the medical bankruptcy rate from these sources is 44.4%—the proportion who directly said that either illness or medical bills were a reason for bankruptcy. But many others gave reasons such as “aggressive collection efforts” or “lost income due to illness” and had large medical debts. Indeed, detailed telephone interview data available for 1032 debtors revealed an even higher rate of medical bankruptcy than our 62.1% estimate—at least 68.8% of all filers.
In conclusion, McArdle states, she is right and Warren is wrong.
But even assuming that their sample was valid, given what bankruptcy experts(including Warren) know, it seems likely that they uncovered an interesting
statistical artifact. Most bankruptcy filings are at least partly strategic--Warren herself urges troubles consumers to run up credit card bills rather than missing a mortgage payment. (This is very good advice). The people with the least room for strategic behavior are presumably people who can't work at all, and/or must run up large bills: i.e., very sick people. Those people did not shift their bankruptcies forward to 2005, because they had no warning that they were going to get sick. Nor could they alter their behavior, as people who were running up less urgent debts may have.
Now, Warren et. al. may disagree that this is the most likely explanation of the data, though I will happily debate any of them who care to defend their interpretation. But I do not think you can get around the fact that they had to mention it. The post-2005 fall in bankruptcies, then the steady subsequent rise back towards the pre-2005
mean, is the central fact about US bankruptcy in the last ten years. It's like
doing a study on bank capital without reference to the financial crisis.
No, it's like criticising someone for not doing what you want them to do, and doing what they want to do instead. What McArdle wants the study to say is irrelevant. The accuracy of the study is the only issue, and McArdle is incapable of assessing it, due to either stupidity, dishonesty, or both.
Yet they not only fail to mention it, but include a lot of window dressing about the proportion of the uninsured, healthcare bills, and their 2001 study, which are designed to leave the reader with the followng impression: medical bills are a growing problem in our society, driving people into bankruptcy in ever higher numbers. Sure, they don't actually say this. But it's not a scientist's job to
mislead only by omission. Had they simply included this fairly obvious
statistic, it would have substantially altered the conclusion that readers drew.
That makes it a material omission, and I think that Warren, of all people, ought
to hold herself to a higher standard.
They don't say it because they don't think it. McArdle says it and demands they say what she wants them to say. Unbelievable. I would say she ought to hold herself to a higher standard, but I don't want to waste my breath.
UPDATE: Incredibly, McArdle has written an article, published in the Dallas Morning News, praising bankruptcy rules and calling the US "the most bankrupt nation on earth."
In 2007, two years after we tweaked our bankruptcy law to make it tougher on debtors, the number of personal bankruptcies had dropped by more than half, but we were still well ahead of Great Britain, our nearest competitor in the Insolvency Olympics: Roughly one in 500 Britons declared personal bankruptcy that year, against about one in 300 Americans. Since then, of course, the subprime crisis has increased our lead. We are the Michael Phelps of debt liquidation.
Why this emphasis on the large number of bankruptcies, at the same time she is emphasizing the decreasing number of bankruptcies? So she can rail against cramdowns, which would result in mortgage reductions, thus hurting the only group that McArdle cares about: bankers.