The Third Eye

Posted on April 25, 2007
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In his blog Ideas, Santa Clara University economist David Friedman (yes, he's Milton's son) wrote about the cost of eyeglasses. He was curious why a new frame and set of lenses costs less than $10 online, but five times that amount or more at most stores.

Part of the answer lies in statutes like Arizona's 32-1684.01, which states that anyone wanting to open an eyeglass store must "provide evidence to the board's satisfaction that at least one licensed dispensing optician works at the optical establishment on a full-time basis." That means the Arizona State Board of Dispensing Opticians, the licensing board for opticians, controls entry into the eyeglass shop business. By imposing educational and financial requirements, it can limit the local supply of opticians and eyeglass stores.

How much might this Board cost Arizona consumers? Making allowance for inferior customer service and the lower overhead costs of doing business online, Professor Friedman estimates the regulations make eyeglasses at least twice as expensive as they would be otherwise. In 2002, Arizona residents spent $174 million on eyeglasses and contact lenses.

In other words, regulations like these may cost consumers somewhere in the neighborhood of $87 million a year. Maybe it's time to take a closer "look" at these regulations.

Key Links

-Cato Institute: The Regulation of Health Care Professionals Other than Physicians
-The Arizona Association of Dispensing Opticians: Statutes

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