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What is Unique about Behavioural Economics? - Prof Ivo Vlaev

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Slides from Prof Ivo Vaev's (Implementation & Organisational Studies - Theme 5) presentation on behavioural economics at CLAHRC WM Programme Steering Committee meeting on 13th May 2015.

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What is Unique about Behavioural Economics? - Prof Ivo Vlaev

  1. 1. What is Unique about Behavioural Economics? Ivo Vlaev
  2. 2. SECTIONS 1. Theories of behavioural choices 2. Behavioural Frameworks 3. Intervention Examples
  3. 3. What makes you choose this insurance policy? What makes you pick that stock? What makes you choose to have that extra drink?
  4. 4. ”Traditional” explanations Because it makes you FEEL good Because of you BELIEVE it is possible Because you PREFER it over the alternatives
  5. 5. Economic theory of rational choice is used for understanding behaviour as utility maximisation
  6. 6. Traditional approaches in public health also describe the causal “inner” states (beliefs, desires, etc.)
  7. 7. If not good enough then find more causal states...
  8. 8. and more ...
  9. 9. Then add some external factors too...
  10. 10. Still only ~ 3%-28% variance explained... see Webb & Sheeran (2006) for a review
  11. 11. What we have learned over > 50 years of research in behavioural economics? “People know the price of everything, but the value of nothing” Oscar Wilde “It turns out that the environmental effects on behaviour are a lot stronger than most people expect” Nobel Laureate Prof Daniel Kahneman “Information & information processing are complements” Colin Camerer
  12. 12. The environment triggers the automatic system • Controlled • Effortful • Rule-based • Slow • Conscious • Rational Reflective System • Uncontrolled • Effortless • Associative • Fast • Unconscious • Affective Automatic System
  13. 13. A toy model of the automatic mind I1 I4 I2 I5 I3 It I6
  14. 14. £5 £50 Constructing our preferences
  15. 15. Constructing our beliefs  Men inferred that they are at higher risk of heart disease after recalling fewer risky behaviours (Alter & Oppenheimer 2006; Rothman & Schwarz 1998)
  16. 16. Economics Preference- matching Salop (1979) Brynjolfsson et al. (2003) Psychology Choice conflict Tversky & Shafir (1992) Dhar (1997) Choice overload Iyengar & Lepper (2000) Constructing our choices
  17. 17. SECTIONS 1. Theories of behavioural choices 2. Behavioural Frameworks 3. Intervention Examples
  18. 18. Determinants of Behaviour Capability Behaviour Opportunity Motivation Fishbein et al. “Factors influencing behaviour and behaviour change” (Handbook of Health Psychology, 2001)
  19. 19. Determinants of Behaviour COM-B (Susan Michie et al UCL)
  20. 20. An amusing but powerful nudge at Schiphol Airport • Image of black fly etched onto urinals led to ‘spillage’ declining by >80%
  21. 21. • Published in March 2010 • Operating framework for applying behavioural insight to public policy • Behavioural Insights Team established in the Prime Minister’s Office Paul Dolan, Michael Hallsworth, David Halpern, Dominic King, Ivo Vlaev
  22. 22. SECTIONS 1. Theories of behavioural choices 2. Behavioural Frameworks 3. Intervention Examples
  23. 23. Prospect Theory: Application Messenger Advisor’s Expertise • People learn from experience to pay more attention to advisors who have given good advice in the past. • Consumers are more influenced by better advisors • Advisors have less influence on more experienced and knowledgeable consumers Advisor’s Trustworthiness • People take more advice from trusted advisors • Greater trust in advisors judged to have: – Similar values – Shared goals – Similar intentions • Being of the same sex and age increases the attention paid to an advisor Advisor’s Personality • Consumers are more influenced by confident advisors irrespective of advice quality • Dissenting advisors are discounted unless they are historically better than the consensus • People are better at taking advice when advisors are more distinct from one another
  24. 24. Would you donate 29p a day (for a year)? Would you donate £106 (for a year?) 0 20 40 60 80 100 Yes No 0 20 40 60 80 100 Yes No 71% 29% 37% 63% Incentives: loss aversion
  25. 25. Social Norms
  26. 26. Defaults  Opt-in  Opt-out Check the box if you want to participate in the organ donor program Check the box if you don’t want to participate in the organ donor program Defaults
  27. 27. Check the box if you want to participate in the organ donor program Check the box if you don’t want to participate in the organ donor program Defaults
  28. 28. Defaults Opt in Opt out Percentage of adults registered as organ donors Do Defaults Save Lives? Science 21 November 2003 Eric J. Johnson and Daniel Goldstein
  29. 29. Salience: reducing clinic non-attendance through SMS reminders • Most common reason given in UK is forgetting appointment • Systematic review of telephone and SMS reminders found that they significantly improved attendance (Hasvold 2011) • Cochrane Review on SMS messages for behaviour change in general concluded that they have positive short-term behavioural outcomes (Fjeldsoe et al. 2009)
  30. 30. Field experiment to improve reminders • East London trust (3 hospitals) where SMS already used • September 2013 – April 2014, >20,000 SMS message sent • Five different types of appointment • Rheumatology • Gastroenterology • Ophthalmology • Cardiology • Neurology NHS REC: 13/NW/0508
  31. 31. Different messages used Name Message Control Appt at [hospital] on [Sep 16] at [10:00am]. To cancel or rearrange call the number on your appointment letter. Number Appt at [hospital] on [Sep 16] at [10:00am]. To cancel or rearrange call 02077673200. Norm We are expecting you at [hospital] on [Sep 16] at [10:00am]. 9 out of 10 people attend. Please call 02077673200 if you need to cancel or rearrange. Costs We are expecting you at [hospital] on [Sep 16] at [10:00am]. Not attending costs NHS £160 approx. Call 02077673200 if you need to cancel or rearrange.
  32. 32. 0 2 4 6 8 10 12 14 Control Number Norms Costs DNARate Message DNA rate reduced by 3.4% points (29%) 3.4% points 1,300 fewer DNAs if applied to all viable appointments over whole trial period 8,000 fewer if applied over one year in same location 320,000 fewer if applied nationwide
  33. 33. Priming – community level intervention
  34. 34. 15 46.9 33 21.6 Control Olfactory Male eyes Female eyes HHC olfactory vs control p<0.001 male eyes vs control p = 0.038 HHC improved in presence of aroma and male eyes (but not female!)
  35. 35. Affect
  36. 36. Commitment  African American women signing a behavioural contract, were more likely to reach their exercise goals (Williams et al. 2006). Exercisegoal
  37. 37. Ego: Encouraging people to join the organ donor register
  38. 38. Ego: nudging to join the organ donor register
  39. 39. 1 Control 2 Norm 3 Norm + Pic 4 Norm + Logo
  40. 40. 5 Three Die 6 Nine Live 7 Reciprocity 8 Action

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