Quit Smoking Decision

An Introduction to Behavioural Economics for Health

There’s no doubt that there’s been fervent interest in behavioural economics in the last couple of years among social marketing and policy practitioners. Both the UK and NSW Governments have developed insights teams dedicated to finding new ways to ‘nudge’ citizens to be healthier, greener and more civic-minded.  So how can behavioural economics help with program design and campaign development?

Social marketing is about changing behaviour – behaviour that is driven by rational and irrational desires.  The rational part of our decision-making process can be influenced by increasing knowledge (e.g. presenting the facts about skin cancer), increasing efficacy (e.g. healthy cooking classes or QUIT hotlines) and through legislation and subsidies (e.g. seat-belt laws, tobacco tax).

However, extensive academic research has found that people are often “predictably irrational”.  When making decisions we take mental short cuts.  We’re influenced by the desires and distractions of the moment. Knowing how people will behave irrationally can provide guidance on how interventions can be structured to influence healthy behaviours.

Below are three common decision errors, which have major implications for healthy behaviours:

Present bias

Present bias is the tendency to focus on the immediate benefits or costs of a situation and undervalue future consequences.  An example is postponing a session at the gym to watch TV; or undervaluing the long-term harms of tanning to look good now.

Researchers are now looking at a range of tools to help manage present bias.  These include offering small incentives immediately after a ‘desirable’ behaviour has been done. One example is a pilot scheme in the UK where mothers from disadvantaged neighborhoods are given food vouchers worth around A$340 if they breastfeed for the first six weeks of their child’s life.

Because the use of incentives is very effective at motivating one-time behaviours (e.g. getting a vaccination or attending a screening), it is now being evaluated as an effective motivator for habit formation (e.g. exercising everyday).

People who commit to making a change are more likely to do so.

The use of ‘contracts’ and commitment devices to pledge to a certain behaviour or goal are also very effective. These devices leverage the desire to be (or to appear) consistent with what we have committed to doing.  Once we have made a choice (e.g. pledge to give up drinking for a month or to run a marathon), we will encounter personal and interpersonal pressure to respond in ways that justify our earlier decision.

This is especially powerful when the pledge or commitment is made in public, such as social media, as people are pressured to be consistent with their earlier commitments.

Status quo bias

Status quo bias is the tendency to choose a ‘path of least resistance’ in our decision-making.  An example of this is in western European countries that have an ‘opt in’ policy for organ donation, that is, the default is non-participation, donation rates tend to be close to just 10%. In contrast, in countries with an ‘opt out’ policy, in which citizens are automatically enrolled as organ donors unless they actively choose to opt out, organ donation rates are typically 98%–99%.

It’s important to consider the ways in which choices or options for programs are structured. The choices which social marketers want people to choose, whether it’s to recycle or take the right medication, needs to be the choice which requires the least amount of cognitive energy to choose.

Loss aversion

Loss aversion is the tendency to put much greater weight on losses than gains. Studies have shown that a loss has roughly twice the disutility of an equivalent dollar gain. Knowing this decision bias can help frame messages and structure the way incentive programs work.

Be Mindful that . . .

While behavioural economics has the potential to make programs and policies more effective, as with any concept or intervention, there are limitations.  The tools presented by behavioural economists are part of a possible solution, and should not substitute for public policies, infrastructural projects, or programs that increase knowledge and efficacy.

We also need to consider the social determinants which affect health and the decisions people make, while looking to policies that will deal with the underlying contributors to poor health, such as poverty, inequity and illiteracy.

As described by Loewenstein and Ubel, behavioural economics should “complement, not substitute for, more substantive economic interventions.  If traditional economics suggests that we should have a larger price difference between sugar-free and sugared drinks, behavioural economics could suggest whether consumers would respond better to a subsidy on unsweetened drinks or a tax on sugary drinks.”

 

Disclaimer: Charissa has written this post as an independent contributor.  This post reflects only Charissa’s views and not those of her employer or clients.

Interested in learning more?  Dr Kevin Volpp, the Founding Director of the Center for Health Incentives and Behavioural Economics at the University of Pennsylvania will be the keynote speaker at the Incentivising a Healthier Australia Forum in  Sydney on Thursday 6 March 2014.  Or, you could always  Contact Us

Charissa Feng

Social Marketing and Health Promotion Consultant at The Reputation Group
Charissa Feng is a health promotion and social marketing consultant with The Reputation Group, specialising in developing and implementing public health and social marketing campaigns. She consults for a range of clients, including the Department of Health in Victoria on its Healthy Together Victoria program, and AIA Australia.

She is also a board director of a Victorian community health service and until recently, a board member of the Australian Association of Social Marketing.

Latest posts by Charissa Feng (see all)

Bookmark and Share