3. What is behavioural economics?
• Combination of economics and psychology in
how individuals human behaviour is changed
• Effects of psychological, social and emotional
factors on economic decisions of individuals
4. BE Assumptions
Individuals are fully rational
• Interventions are needed by policy makers when an individual is
unable to help him/herself e.g. loans for medication
Individuals are completely selfish
• When decision affects other people eg when one does not take heart
attack medication and gvt (tax payers) has to intervene to assist when s/he
has an attack
Individuals are forward thinking decision makers
• Individuals think of the future than the present
• Why do individuals deviate from these assumptions???
5. 3 Health Behaviours
Medication Adherence
• Not taking medication ca lead to serious health costs
Obesity and weight control
• Decrease will result in improvements to health and costs
Medical donations
• Bone marrow, organ, blood, organs etc
6. Reward incentives
• Individuals are motivated to leave healthy
lifestyles and behaviours if given incentives
Examples
• Going to the gym
• Participating in a research to quit smoking
7. Salience for information
• Individuals have no limit in decision making
• Focus on given information only
Examples
• Labelling of food products (nutrient)
• Taking of meds of one who is in pain and not
8. Context and framing
• Individuals make decisions based on options
available to them and constraints they face
• Examples
• Price tags
• Money they have
9. Social forces
• Individuals are social animals and mirror
actions of others
• change behaviour if they know they are being observed
• Tend to conform to actions taken by others if they are
told of the actions others have taken
• Take action more likely when asked to do so
10. Questions
• What do you think of the assumption that
individuals have no limit in decision making?
• How does BE link with health
• Is the issuing of incentives to individuals a
sustainable way of changing unhealthy
behaviours?
