Conclusions

Abstract

Abstract This chapter summarizes the main components of the quid pro quo theory compared to the corresponding components of conventional theory. After considering some of the empirical challenges that would be faced in applying the new theory, the main contributions of the theory are summarized. The chapter then illustrates the importance of the quid pro quo theory by reimagining the last 75 years of health insurance policy if it were based on the quid pro quo theory instead. The chapter, and book, concludes by reiterating the the book’s thesis. In an appendix, the acceptance among economists of two aspects of the quid pro quo theory—prospect theory’s finding that consumers prefer the risk of loss to a certain loss, and the theoretical finding that much of moral hazard is due to income effects—is shown to be far from complete. Some reasons for the reluctance to accept these aspects are suggested.