[vsskanth]

I don't agree the cost of university is driving the salaries here. It's all about how many doctors are available to meet demand. If there are less, it's going to drive up salaries. There are other countries where the cost of getting a degree in a certain specialty is very low due to state subsidies but the salaries are very high once they graduate since they are scarce.

[syki]

In countries with mostly free higher education doctor’s salaries are less on average than in the U.S. You really think having several hundred thousand dollars in student loans doesn’t in any way affect salaries?

[huitzitziltzin]

There are important differences in most of those countries including (importantly!) direct government regulation of prices, including salaries in the medical market.

British doctors, for example, work under a contract negotiated between a British version of the AMA and the British government. The government and the providers both have leverage, but the British government is the primary purchaser of services in that country. Salaries are lower since the government exerts pressure on them, as they are paid for out of direct taxation.

I understand that you feel very strongly that student debt for doctors is unjustifiable or too high or something. Student debt is not the main driver (or even a driver) of high salaries among US doctors. The level of their student debt is a completely separate topic.

[syki]

There are private doctors in Canada and the UK and they don’t make as much as their American counterparts.

Anecdotal evidence. My wife has $400,000 in med school debt. She needs a $300,000 salary to afford paying that debt off whilst also maintaining a “good” lifestyle. Med school, residency, etc. were hard and sacrifices were made to go through them. It would not be worth it to go through that without a reasonably high salary.

She’d gladly have gone through the process for a $200,000 a year job. It is certainly the case that highly motivated, highly intelligent people take into account the ability to service med school debt when deciding to become a doctor vs. another going into another field. It is obvious that high med school debt has an effect on the salary needed to attract talent.

David Carr won the Nobel Prize in part for his work questioning the traditional supply/demand view of labor economics. Here is a link to an interesting (to me) paper.

https://www.jstor.org/stable/24695058

[huitzitziltzin]

> There are private doctors in Canada and the UK and they don’t make as much as their American counterparts.

Great example. These doctors face competition from a low- or no-cost private sector. This keeps prices down since every consumer can use the state sector. This is true in many countries w/ state health sectors.

> David Carr won the Nobel Prize in part for his work questioning the traditional supply/demand view of labor economics.

Could you mean David CARD?

https://davidcard.berkeley.edu/

His work of course I know. It is related to the economics of minimum wages. I would not say it questions the traditional supply and demand framework (nor would he say that, I bet), though he does point out an empirical observation which doesn't fit well within that framework.

[syki]

Sorry. Yes, Card. Clearly I’m not an economist but I believe within the field is an emerging movement question the traditional iron clad belief in supply/demand being the explanation in labor economics.

One cannot always use the state system. For example, some elective surgeries can’t be done in the state system fast enough for the upper class and then there are those who want vanity cosmetic surgery. I don’t know what the data says but I’d be surprised if private cosmetic plastic surgeons make as much in France as they do in the U.S.

For the record I believe licensed doctors in, say, the EU should be able to practice medicine here without having to do a residency. Though there is a moral consideration in terms of draining the medical talent from countries like Greece, Romania, etc. I believe that med school in the U.S. should be free and that doctor’s salaries could correspondingly go down without decreasing the supply of people wanting to become doctors. It seems obvious to me that having $x in student loan debt is a factor in determining the required starting salary to attract enough talent. I don’t see how anyone can think otherwise. If the debt can’t be serviced easily enough while having a good enough standard of living then these talented people will do something else.

Of course, I could be wrong about everything. There are lots of “obvious” things that aren’t true.

[ChrisLomont]

In almost every country professional salaries are much lower, so looking only at doctors and thinking your argument is unique to them is flawed.

And no, debt does not affect salaries. It's the other way around - with the potential to make a lot more income, one is willing to get more debt to reach that goal. Higher salaries people cause more demand, and so prices go up.

If debt affected salaries, you'd expect your claim to play out on all fields, which it does not. Higher paying undergrad salaries don't correlate to more debt, for example.

[syki]

I made no claims about uniqueness so I don’t understand your first paragraph.

If debt affected salaries, you'd expect your claim to play out on all fields, which it does not.

This is very much wrong! All fields are not equal. No one should expect motivations, forces at a play in one field to necessarily apply to all fields.

Do you think highly intelligent, highly motivated people would take on hundreds of thousands dollars of student loan debt without an expectation of a high enough salary to service that debt while maintaining a good lifestyle? We are talking about people who could go into just about any field. To be able to attract the talent the salaries need to be high enough to service the debt. Without the debt the salary needed to attract that talent would go down.

My wife’s med school debt is $400,000. She needs the $300,000 salary she has to service this debt while living a good lifestyle. That high salary will last the rest of her life and not just for the few years it takes to pay off her debt. If she had no debt the she’d be able to live the same lifestyle making $225,000 per year.

Personally I think it’s naive to think that the debt level doesn’t come into play when determining the salary needed to attract the labor of highly intelligent, highly motivated people. You really think that in the alternate world where the U.S. had free med school and all else was the same that salaries would be the same?

https://www.jstor.org/stable/24695058

[ChrisLomont]

>I made no claims about uniqueness so I don’t understand your first paragraph.

You responded to a point from a previous poster with "In countries with mostly free higher education doctor’s salaries are less on average than in the U.S." as if those doctor low salaries were the result of less debt (which is your argument throughout this thread - that debt makes salaries higher), and I pointed out that this is not unique to doctors, and the costs across all fields don't seem to have debt/salary correlation. Your evidence for your thesis does not hold up outside doctors, and then only for US doctors, so it's hard to believe there is some mystical economic law working only for that sub-case.

>the debt level doesn’t come into play when determining the salary needed to attract the labor of highly intelligent

It does. However your claim is "You really think having several hundred thousand dollars in student loans doesn’t in any way affect salaries?" as if the debt forces employers to pay more. It nearly certainly works the other way - if you are going for a job that pays a lot, you are willing to take on more debt to obtain it. Thus those teaching students how to make so much money are able to charge more for teaching that skill.

This is the exact same causal direction of pretty much any asset. Something is more valued, so people will pay more to obtain it. You're implying the other direction.

>To be able to attract the talent the salaries need to be high enough to service the debt

This again makes little sense as to direction. Quants could get PhDs in STEM (mine is in math, and I have a lto of quant friends) and they make vastly more than all but the highest doctors, yet they don't have all the debt. As the quant field matures (and if it lasts), the cost to obtain training will likely rise.

Not sure what your paper shows, except that which I already claimed: doctors are rare, skilled, and take a long time to make. As such they will get paid a lot because their skills are in demand. This has zero to do with debt - this is exactly supply and demand.

Next, again because of supply and demand, those able to teach people to become doctors realize those doctors will make a lot of money, so they, like all free market actors, will charge what the market will bear. Thus the causation is opposite what you claim - each step in the chain absorbs what the market will bear.

It's not like schools decided to charge far beyond what anyone would pay, and later the wages rose to pay for that debt beyond what people could previously pay. It's more that as wages rose, due to demand, school increased prices to capture what the market would bear to provide those skills.

[syki]

The paper calls into question the existence of a supply/demand curve and as such is relevant to all of your points. Supply/demand is not sufficient to describe elasticity of labor in all cases. For example, in the quoted article:

“…concludes that 'wage elasticity is unresponsive (or inelastic) and that very large increases in wages would be needed to induce even moderate increases in nurse labour supply', adding that the 'weak role of wage increases in promoting nurse supply is also supported by recent qualitative studies..”

I misread your original comment regarding uniqueness. I now understand what you meant. The situation for doctors in the U.S.:

It’s a field that requires highly motivated, highly intelligent people to go through the process. There is a high opportunity costs involved due to the 10 - 12 years of required training at little or no pay. A massive debt is incurred to become a doctor. The people entering the field have the talent and ability to do something else that has high pay or is otherwise rewarding.

As such, attracting people into the field must take into account the ability to service the debt. Suppose starting next year all graduating med students were forevermore saddled with a $1 million med school tax upon graduation in form of a debt to the Treasury at 5% interest. Salaries for incoming doctors would eventually have to rise to take this into account in order to attract talent. Clearly the large debt incurred in order to become a doctor has some effect on the salary necessary to attract talent.

It's not like schools decided to charge far beyond what anyone would pay, and later the wages rose to pay for that debt beyond what people could previously pay. It's more that as wages rose, due to demand, school increased prices to capture what the market would bear to provide those skills.

It’s the case that this model of how things work is too simplistic. There’s a dance between the different forces at play. Each of the forces involved evolves over time and they all adjust over time to each other. That is the proper modeling of such things.

[s1artibartfast]

>As such, attracting people into the field must take into account the ability to service the debt. Suppose starting next year all graduating med students were forevermore saddled with a $1 million med school tax upon graduation in form of a debt to the Treasury at 5% interest. Salaries for incoming doctors would eventually have to rise to take this into account in order to attract talent.

The easy way to conceptualize this is the waiting list for medschool. Today the line is out the door and around the corner. As tuition goes up, the line will start shrinking. Only after the line is gone and fewer doctors are graduating will salaries start rising.

[kbelder]

It's mostly the other way around. Because of demand, doctor's salaries are high, and so the cost of education increases because new doctors can absorb the high loan payments.

[syki]

I believe there is a dance between these various quantities. Overall, my claim is that large med school debt does play a role in high doctor salaries. I don’t claim it is the only factor but just that it is a factor. I further claim that if med school was free them doctor salaries wouldn’t have to be quite as high as they are. That is, the same number of people would be aspire to be doctors with med school being free but doctor’s salaries being x% lower.

[s1artibartfast]

>That is, the same number of people would be aspire to be doctors with med school being free but doctor’s salaries being x% lower.

I think the point others are making is that there is already a surplus of people that want to be doctors and a fixed number of a medical degrees in both scenarios.

If doctors already make more than enough to pay off their medical debt, what would change to make them start accepting lower salaries? It seems that the salary is driven by competition between hospitals (demand ) opposed to what doctors are willing to take. I guess it is possible that doctors without school debt would less actively chase higher salaries, so perhaps there is some small impact there.

That said, it seems by far the best solution is still more doctors, with or without school debt.

[syki]

If doctors already make more than enough to pay off their medical debt, what would change to make them start accepting lower salaries..

If med school were free then salary required to live at the required standard would go down since the need to service the debt would no longer be there.

[s1artibartfast]

I think that is the point. What is the "required standard" where doctors refuse more money? I don't think there is one. If doctor can live on 100k a year, they can also live on 500k a year. If you were a doctor, which job would you pick? Hospitals will always compete on salary because there aren't enough doctors to go around, and they don't want to be the one without a doctor.

Sure, some people might settle for a low-ball salary for personal reasons if they don't have debt, but I think the vast majority would follow the salary.

[maxerickson]

If it has any effect it is much less than the regulatory bottlenecks imposed on the number of doctors.