>I would have thought that we have the opposite problem, that given the intellect required to become a doctor and practice medicine, at some point at the margin students smart enough to go to medical school will go work for Goldman Sachs or a hedge fund.<
This is a very good point. Becoming a doctor is a long, arduous process that not only involves medical school but years of low-paid, high-stress labor before you start making a reasonable income.
Although not a direct analogy, I went to grad school at Columbia. We started with about 15 people in the molecular biology program, and 3 got their PhDs. What happened to most of the rest? Wall Street or high-paid consulting jobs.
This issue might be less exaggerated outside of New York City; nevertheless if you're smart enough to go to grad school (or medical school) you've got options. Cut the pay of doctors and you'll also cut the number of talented physicians dramatically.
Just from experience--since a good half of my friends are in medicine--people don't become doctors for the big payout at the end. There are plenty of easier ways to make money if you've got the brains to get into med school.
