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Bill Gardner

Fascinating, Paul. If I read this right, the high compensation of US physicians is really a side effect of the overall high inequality of the US.

Paul Kelleher

Right, that seems to be what Laugesen and Glied are suggesting. Instead of seeing the U.S. as the outlier (in terms of earnings/per capita GDP), you could see it as right there in the pack of all OECD countries (in terms of of earnings/high earners' incomes). The U.S.'s outlier status on the first score might then be a side-effect of (1) docs' salaries keeping up with high earners' as they do in all OECD countries and (2) the U.S.'s outlier status in income inequality.

Brendan Saloner

What about the higher cost of graduate medical education and time spent in low paying residencies, in the United States? How is that factored in?

Paul Kelleher

Brendan, the Laugesen/Glied article discusses that, although we don't need to factor that in to make the point that U.S. physicians--who incur relatively higher tuition expenses--still make less as a percentage of high-earners' income than the non-US OECD average. Right? Here are the authors are practice and tuition expenses:

"If a physician practiced for thirty-five years (based on a present-value formula), the additional earnings, net of expenses, required to pay off this [tuition] investment would amount to about $21,300 per year for a primary care physician and about $24,400 per year for an orthopedic surgeon.

"Although the tuition cost of medical education in the United States borne by individuals is substantial, it cannot fully account for the observed differences between the earnings of US physicians and physicians in all other countries. The difference between annual net incomes, after practice expenses, of primary care physicians in the United States and in the second most costly country, the United Kingdom, is $27,000—somewhat more than the estimated $21,300 per year of practice required to recoup the average tuition investment in education. The difference between the annual net incomes of orthopedic surgeons in the United States and the United Kingdom is $118,000—nearly five times the estimated $24,400 difference in investment repayment costs."

Please note: I don't mean to suggest that the authors are attributing all of the higher earnings/per capita GDP ratio to income inequality.

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