Does Licensing Ensure Quality?


A recent study from the Mercatus Center found that occupational licensing does not appear to affect service quality, but does drive up the cost of that service.  As Peter Fricke summarizes on the Daily Caller:

Their data reveals that, “Annual optician earnings are substantially higher (by approximately $7,000) on average in states that have optician licensing statutes than in states that do not regulate the profession.”

Even after accounting for “other unobservable differences” between states by comparing optician earnings before and after the enactment of licensing requirements, they say, “there is evidence of higher earnings (more than $4,300 greater) after a state has adopted licensing legislation.” …

“Quality can be subjective and difficult to measure precisely,” the authors concede, but suggest that premiums for vision and malpractice insurance provide an adequate stand-in, since better service quality should generally coincide with higher consumer prices and lower malpractice rates.

On both measures, they find that premiums are almost exactly the same regardless of whether a state requires licensing of opticians, indicating that insurance companies “do not appear to consider a lack of licensing a risk factor.”

Whether we’re talking opticians, barbers, or taxi drivers, professional licenses are special interest benefits for established players in a marketplace, with the cost falling on (you guessed it) the consumer.

  • Warrington Faust

    In my experience, wherever their are regulators and regulated, the relationship eventually becomes cozy and “standard procedures” arise to ease the burden on both. The original “policing” idea gets forgotten, or become secondary to making it easier on each other.