IDEAS home Printed from
   My bibliography  Save this article

Colleagues, Where Is the Market Failure? Economists on the FDA


  • Daniel B. Klein


This article works from a point of view that holds that there is no market-failure rationale for three primary FDA-administered interventions concerning drugs and medical devices. I critically analyze the culture, rhetoric, and judgment of economists who write on those issues. I take such literature as a case study in how statist political culture degrades academic economic discourse. A finding that helps to frame what follows is that much good economic sense survives the degradations. Many economists have expressed judgments about the FDA. In almost all cases, they have supported liberalization, often dramatic. Thus I suggest that economists reach a conclusion on the first-order question. But most of the paper is devoted to second-order considerations: Do economists agree that either economists or fundamental economic reasoning favor liberalization of the restrictions? In fact, in either variation, economists do not agree on the second-order question. I explore the second-order discourse, and suggest that taboos surround the issue, taboos that shield popular political superstitions—in particular, taboos against the critical examination of fundamentals. I explore the rhetoric of economists’ writings and the political sociology surrounding research on the policies in question.

Suggested Citation

  • Daniel B. Klein, 2008. "Colleagues, Where Is the Market Failure? Economists on the FDA," Econ Journal Watch, Econ Journal Watch, vol. 5(3), pages 316-348, September.
  • Handle: RePEc:ejw:journl:v:5:y:2008:i:3:p:316-348

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Victor A. Matheson, 2005. "Contrary Evidence on the Economic Effect of the Super Bowl on the Victorious City," Journal of Sports Economics, , vol. 6(4), pages 420-428, November.
    2. Robert A. Baade & Robert Baumann & Victor A. Matheson, 2008. "Selling the Game: Estimating the Economic Impact of Professional Sports through Taxable Sales," Southern Economic Journal, Southern Economic Association, vol. 74(3), pages 794-810, January.
    3. Dennis Coates, 2006. "The Tax Benefits of Hosting the Super Bowl and the MLB All-Star Game: The Houston Experience," International Journal of Sport Finance, Fitness Information Technology, vol. 1(4), pages 239-252, November.
    4. Dennis Coates & Brad R. Humphreys, 1999. "The growth effects of sport franchises, stadia, and arenas," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 18(4), pages 601-624.
    5. John Siegfried & Andrew Zimbalist, 2006. "The Economic Impact of Sports Facilities, Teams and Mega-Events," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 39(4), pages 420-427, December.
    6. Robert Baade & Robert Baumann & Victor Matheson, 2005. "Selling the Big Game: Estimating the Economic Impact of Mega-Events through Taxable Sales," Working Papers 0510, College of the Holy Cross, Department of Economics.
    7. Dennis Coates & Craig A. Depken, II, 2006. "Mega-Events: Is the Texas-Baylor game to Waco what the Super Bowl is to Houston?," Working Papers 0606, International Association of Sports Economists;North American Association of Sports Economists.
    8. Robert Baade & Victor Matheson, 2004. "The Quest for the Cup: Assessing the Economic Impact of the World Cup," Regional Studies, Taylor & Francis Journals, vol. 38(4), pages 343-354.
    9. Dennis Coates & Brad R. Humphreys, 2001. "The Economic Consequences of Professional Sports Strikes and Lockouts," Southern Economic Journal, Southern Economic Association, vol. 67(3), pages 737-747, January.
    10. Michael C. Davis & Christian M. End, 2010. "A Winning Proposition: The Economic Impact Of Successful National Football League Franchises," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 39-50, January.
    11. John J. Siegfried & Andrew Zimbalist, 2000. "The Economics of Sports Facilities and Their Communities," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 95-114, Summer.
    12. Baade, Robert A & Dye, Richard F, 1988. "An Analysis of the Economic Rationale for Public Subsidization of Sports Stadiums," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 22(2), pages 37-47, July.
    13. Dennis Coates & Brad R. Humphreys, 2002. "The Economic Impact of Postseason Play in Professional Sports," Journal of Sports Economics, , vol. 3(3), pages 291-299, August.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Jon Diesel, 2010. "Do Economists Reach a Conclusion on Organ Liberalization?," Econ Journal Watch, Econ Journal Watch, vol. 7(3), pages 320-336, September.

    More about this item


    Food and Drug Administration; FDA; drug approval; prescription requirements; liberalization; market failure; cost-benefit analysis; net-benefit calculation; a fortiori argument;

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ejw:journl:v:5:y:2008:i:3:p:316-348. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jason Briggeman). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.