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Stossel and Symmetric Information
Stossel and Symmetric Information
May 12, 2025 10:16 AM

Jim Aune, blogger-in-chief at The plained yesterday about his health care treatment. He says, “I have been in constant pain for 36 hours. I actually used a cane to go to the office yesterday for some meetings. The problem? I have a trapped nerve in my abdomen from a double hernia repair a year ago. I got shot up with steroids about 3 weeks ago, and that worked for about 5 days, but I still can’t walk without a ripping sensation (as if my right leg were being separated from my side).”

That sounds horrible. He continues: “I’m about to go see the doctor again today (he’s a nice guy, as family practice doctors usually are, as the anesthesiologist at the pain clinic), so I decided to read up on the Internets about this condition. Now, a little learning, especially online, is a dangerous thing, but it appears that entrapped nerves have gone from happening in 1% of hernia repair patients to closer to 40%, and the speculation is that the new use of plastic mesh is a possible cause.”

It seems that Aune somehow associates John Stossel with his problem. “Enter the biggest jackass on television: John Stossel of 20/20, who believes that the market solves all problems, and that any government intervention in that frictionless market creates no end of bad ‘unintended consequences.'”

What is Aune’s argument against Stossel? After citing a Daily Kos item, Aune contends, “markets are wonderful things, but they only work in cases of ‘symmetric information.’ That is,they work efficiently when both parties to an exchange have nearly similar information.” (Last night’s episode of ER dealt with a very similar issue).

Markets only work in cases of symmetric information. Is this true? Or is the opposite true? Hayek’s observations about the nature of diffuse and unequal information are the basis for his arguments against the practicality of state intervention. As Steven D. Levitt and Stephen J. Dubner put it in their book Freakonomics, “We accept as a verity of capitalism that someone (usually an expert) knows more than someone else (usually a consumer).” Medical care isn’t the only example of information asymmetry, of course. Typical ones include car sales, or especially car repair, but they can apply in any instance where there is particular expertise involved.

Levitt and Dubner go on, “But information assymetries everywhere have in fact been mortally wounded by the Internet.” Now it is true that in practice, as in Aune’s experience, there are all kinds of limits on the potential for the Internet to even out information. It takes time, access, and a certain amount of patience to educate oneself about certain medical conditions, for example. Thus Levitt and Dubner go on to admit, “The Internet, powerful as it is, has hardly slain the beast that is information asymmetry.”

Aune later asserts, “markets do not work efficiently when information is asymmetric.” Maybe they don’t work as efficiently as they might otherwise, but they still seem to work, and perhaps better than any other option available to us. And there are methods for the sharing of information and such that does not necessitate government involvement (independent ratings, consumer reviews, and the like).

It’s not clear what Aune’s solution is (if there is one in plaint), but I take it that Aune is arguing at least implicitly that the government needs to be the entity that solves the problem of information asymmetry. Would he rather have no choices, even the limited ones he is inadequately informed about, and instead have the government decide for him? Why don’t we just make doctors government employees? Then they can enforce the course of treatment they deem best.

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