BEHAVIORAL ECONOMICS OF HEALTH BEHAVIOR Linh Bui

Behavioral economics of health behaviorLinh Bui

Role of Choice

“Choose a job. Choose a career. Choose a family…Choose good health, low cholesterol, and dental insurance. Choose fixed-interest mortgage repayments. Choose a starter home…Choose your friends. Choose your future. Choose life. But why would I want to do a thing like that? I chose not to choose life: I chose something else. And the reasons? There are no reasons. Who needs reasons when you’ve got heroin??

_TRAINSPOTTING (1996) [Screenplay adapted from the novel by IRVINE WELSH]

Contents

• Characteristics of behavioral economics

• Forms of behavioral economics

• Quantifying the Relative value of Addictive Drugs

and other commodities

• Demand curve

• Expenditure curve

• 2 strategies to assess demand for drugs/other commodities

Behavioral economics

• Understand decision making in population of unhealthy or at-risk individuals

• Overconsumption (substance abuse, obesity, etc.,)

• Health behavior linked to commodities (tangible consumable products)

Characteristics of behavioral economics• Emphasis on individual person

• With given the amount of time, money, effort, how we make choices and what factors affect our decisions

• Understand the nature of rationality and irrationality in human behaviorHomo economicusHomo irrationalis

Other resources

Game theory

“Prisoner’s dilemma”

1st criminal 2nd criminal

Both remain silent A 6-month-sentence

A 6-month-sentence

1st criminal betrays the other

Free A 10-year-sentence

Both betray each other

A 5-year-sentence A 5-year-sentence

Prospect theory

• Gambles (prospects) under conditions of risk are inconsistent in reference to whether there are gains or losses

• More conservative preferences for gains but more risky preferences for losses

Prospect theory

Choice 1 Choice 2

50% chance to win $150 Definitely lose $100

50% chance to lose $100 50% chance of winning $50 and 50% chance of losing $200

• Preferences are a function of :– Absolute resources– Relative changes in resources

Matching law• Matching between individual behavior and relative

reinforcement available• With a finite resources (time, money), how individuals access to

activities (eating, drinking, spending leisure time)

• Study substance abuse, tobacco and food overconsumption: Relative value of alcohol, tobacco, food remains high in spite of escalating health and psychological costs (physical illness, financial burden,etc.,)• Commodity overvaluation• Impulsive temporal discounting• Risky probability discounting: Willingness to accept greater

probabilities of negative outcomes to gain larger rewards

Matching law :Example

Overeating:

• Commodity overvaluation: Food (cheeseburgers ,etc.,) is overvalued (at a certain price, consumption is higher and willingness to pay is also higher)

• Impulsive temporal discounting: Overvaluation of immediate rewards (pleasure of eating, reduce stress, etc.)

• Risky probability discounting: Willingness to accept greater probabilities of obesity and other related health problems

Matching law: Example• Commodity

overvaluation

• Impulsive temporal discounting

• Risky probability discounting:

What might be the critical insight from matching law?

The relative value of an outcome is jointly determined by the outcome itself and alternative sources of reinforcement

Matching law: Example• Commodity

overvaluation

• Impulsive temporal discounting

• Risky probability discounting:

What might be the critical insight from matching law?

The relative value of an outcome is jointly determined by the outcome itself and alternative sources of reinforcement

Quantifying Relative value of Addictive Drugs and other commodities

• Law of demand

• Cocaine vs money (Higgins et al. 1994)

• Relative value of a substance: Benefit-cost ratio

applied to a substance at a given price

Demand curve

Demand curve

Intensity of demand

Demand curve

Inelastic

Elastic

Pmax

Demand curve

• Elasticity : How consumption change relative to

price changes

• Inelastic vs elastic

• Elasticity index: Overall cost-benefit ratio

• Pmax (Price maximum): how far demand goes

before it starts to be affected by costs

• Omax (Output maximum) = maximum amount of money (or other

resources) the individual was willing to spend on the commodity

How much a person value a commodity or behavior

Expenditure curve

Omax

Laboratory demand paradigms

• In vivo consumption under escalating conditions of response to cost

• Pharmacological studies of abuse liability and/or therapeutic viability

• Avoid reliance on self-report

• High experimental burden, ethical issues

Purchase tasks

• Estimate drug consumption at escalating levels of price

• Support for hypothesis: substance dependence and overconsumption are characterized by overvaluation of the commodities

• Self-report data but stable

Purchase tasks

• Dynamic changes in relative value of a drug: Subjective states (craving and stress) drive motivation for drugs

• Study substance abuse in a person’s natural environment: measure the relative reinforcing efficacy (socializing, watching television, exercising,etc.,)Anhedonia: heavy drinkers and drug users report less reinforcement from a variety of nonsocial activities

Conclusion• Characteristics of behavioral economics:

Unit of analysis: individual personUnderstand the nature of rationality and irrationality in human

behavior

• Matching law : Theoretical framework to understand overconsumption of addictive commodities

• Methods for demand assessment:Laboratory demand paradigmsPurchase tasks

• How does behavioral economics link to previous theories?

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DECISIONS/INTENTIONS

SOCIAL SITUATION

BIOLOGY/PERSONALITY

THE THEORY OF TRIADIC INFLUENCE

ATTITUDESTOWARD THE

BEHAVIOR

SOCIALNORMATIVE

BELIEFS

Trial Behavior

EXPERIENCES: Expectancies -- Social Reinforcements -- Psychological/Physiological

SELF-EFFICACYBEHAVIORAL

CONTROL

Nurture/CulturalBiological/NatureIntrapersonal Stream Social/Normative Stream Cultural/Attitudinal Stream

Values/Evaluations

Knowledge/Expectancies

PerceivedNorms

Information/Opportunities

InterpersonalBonding

SocialCompetence

Interactions w/Social Instit’s

Others’Beh & Atts

Motivationto Comply

Skills:Social+General

Sense ofSelf/Control

SelfDetermination

1 2 3

7 8 9 10 11 12

13 14 15 16 17 18

l

4 5 6

19 20 21

22

23

DistalInfluences

ProximalPredictors

Levels ofCausation

UltimateCauses

Social/Personal Nexus

Expectancies & Evaluations

Affect andCognitions

Decisions

Experiences

a

b c d e

f

g h i

jk m n

o

p q r

s

t u v w

x

Related BehaviorsJ

K

CF

IB E HA D G

CULTURALENVIRONMENT