This presentation introduces viewers to concepts in behavioral economics as they relate to healthcare services and decision-making. I discuss a number of heuristics and biases that impact decisions and perceptions, using specific examples from healthcare literature.
2. +
Traditional Economics
Health economics is a branch of economics concerned with
issues related to efficiency, effectiveness, value and behavior in
the production and consumption of health and health care.
Assumptions of traditional economics
People have rational preferences and act rationally
People have complete self control
People are selfish and seek to maximize their utility
Are these assumptions true?
3. +
Behavioral Economics
Behavioral economics and the related
field, behavioral finance, study the effects of psychological,
social, cognitive, and emotional factors on
the economic decisions of individuals and institutions and the
consequences for market prices, returns, and the resource
allocation
“Imperfect people are making imperfect decisions, and
behavioral economics does a better job than mainstream
economics of explaining and predicting this reality.”
4.
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End-of-Life Care Decisions
Three groups randomized to receive one of three advance
directive forms
Form 1 (Opt-In): A standard advance directive form with two choices
to express preference for care: life-extending or comfort-oriented
Form 2 (Opt-Out): A default option was selected, and patients could
opt-out of the default option if desired: comfort-oriented care
Form 3 (Opt-Out): A default option was selected, and patients could
opt-out of the default option if desired: life-extending care
What percent of patients selected comfort-oriented care?
Form 1 (Opt-In): 61%
Form 2 (Opt-Out, Default Comfort Care): 77%
Form 3 (Opt-Out, Default Life-Extending Care): 43%
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Vaccination Reminders
Two forms of reminder mailings were sent to patients to remind
them to receive the flu vaccine
Form 1: Standard reminder (“Remember to get your flu vaccine”)
Form 2: Reminder + “Write down a date and time you plan to get the
flu shot”
Did the type of form matter?
Those who wrote down a date and time had a 4.2 percentage point
higher vaccination rate than those who received a standard
reminder
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Concepts in Behavioral Economics
Scenario One: Potential Heart Attack
A 60-year-old male patient (who was
just fired from his job) is admitted in
an emergency ward with the following
symptoms: pain radiating to left arm,
skin eruption, accelerated pulse rate,
pressure on the chest, pain while
passing urine, strong leg pain,
shortness of breath, sore throat, and
low level of oxygen pressure in the
blood
Scenario Two: Potential Heart Attack
A 60-year-old male patient is
admitted in an emergency ward with
the following symptoms: pain
radiating to left arm, skin eruption,
accelerated pulse rate, pressure on
the chest, pain while passing urine,
strong leg pain, shortness of breath,
sore throat, and low level of oxygen
pressure in the blood
Stress Reaction: 26%
Heart Attack: 74%
Stress Reaction: 0%
Heart Attack: 100%
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Concepts in Behavioral Economics
Scenario One: You are working in a
hospital and you notice a male lying
down in the waiting room. When doing
your assessment you notice the
following: smell of alcohol on his
breath, slurred speech, uneven gait,
and a weakness in his right arm.
Scenario Two: You are working in a
hospital and you notice a male lying
down in the waiting room. When
doing your assessment you notice
the following: slurred speech, uneven
gait, and a weakness in his right arm.
Stroke: 27%
Inebriation: 73%
Stroke: 98%
Inebriation: 2%
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Concepts in Behavioral Economics
Scenario One: You are working in a
hospital and you notice a male lying
down in the waiting room. When doing
your assessment you notice the
following: smell of alcohol on his
breath, slurred speech, uneven gait,
and a weakness in his right arm.
Scenario Two: You are working in a
hospital and you notice a male lying
down in the waiting room. When
doing your assessment you notice
the following: slurred speech, uneven
gait, and a weakness in his right arm.
Stroke: 27%
Inebriation: 73%
Stroke: 98%
Inebriation: 2%
31. +
Concepts in Behavioral Economics
The U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two
alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the
consequences of the programs are as follows: If program A is adopted, 200 people will be saved. If program B is
adopted, there is a one-third probability that 600 people will be saved and a two-thirds probability that no people
will be saved. Which of the two programs would you favor?
The U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two
alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the
consequences of the programs are as follows: If program C is adopted, 400 people will die. If program D is
adopted, there is a one-third probability that nobody will die and a two-thirds probability that 600 people will die.
Which of the two programs would you favor?
32. +
Concepts in Behavioral Economics
The U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two
alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the
consequences of the programs are as follows: If program A is adopted, 200 people will be saved. If program B is
adopted, there is a one-third probability that 600 people will be saved and a two-thirds probability that no people
will be saved. Which of the two programs would you favor?
The U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two
alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the
consequences of the programs are as follows: If program C is adopted, 400 people will die. If program D is
adopted, there is a one-third probability that nobody will die and a two-thirds probability that 600 people will die.
Which of the two programs would you favor?
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Applying Behavioral Economics
Define the health challenge
Why aren’t people using mosquito nets?
Why are women having unwanted pregnancies?
Develop hypotheses about the reasons for the problem
Practical reasons: cost, convenience, availability
Motivations, cognitive and behavioral barriers
Design the experiment
Informed selection of comparators
Deliver
Inform current and future programs and interventions
42. +
Applying Behavioral Economics
It would be shortsighted to overlook
simple, inexpensive, and powerful
behavioral interventions that can
help close the gaps in the global
health system.
Editor's Notes
Action bias is essentially, don't just stand there, do something. When patients visit a physician, they expect a physician to do something (whether it is) making a diagnosis, creating a treatment plan, writing a prescription, ordering an MRI (or) admitting the patient. There are a number of times, however, when the physician knows that there isn't really a need for any of that. The classic joke among physicians is that: “I can write a prescription and you'll get better in seven days, or I can not write a prescription and you'll get better in a week.” But what patients want is action.
Regret Bias – 401K
People Know what they they want and they can do what they want (iwllpower)
2:10
77 percent of patients in the comfort-oriented group retained that choice, while 43 percent of those in the life-extending group rejected the default choice and selected comfort-oriented care instead. Among the standard advance directive group, 61 percent of patients selected comfort-oriented care
The researchers found that those who received a reminder mailing and were prompted to write down the date and time they planned to get a flu shot had a 4.2 percentage point higher vaccination rate than those who just received a reminder in the mail.
Milkman et al Using Implementation Intention prompts to enhance influenza vaccination rates
In both countries, clinical suspicion of West Nile fever sharply rose approximately 1 week after an increase in media coverage (Figure) and declined gradually following the decrease in media coverage. In both countries, most of the test results were negative for the disease, indicating exaggeration of clinical suspicion. In Connecticut, none of the 224 samples tested yielded positive results. In Israel, 491 of 2101 samples (23%) yielded positive results.
In both countries, clinical suspicion of West Nile fever sharply rose approximately 1 week after an increase in media coverage (Figure) and declined gradually following the decrease in media coverage. In both countries, most of the test results were negative for the disease, indicating exaggeration of clinical suspicion. In Connecticut, none of the 224 samples tested yielded positive results. In Israel, 491 of 2101 samples (23%) yielded positive results.
https://www.youtube.com/watch?v=KVh52Z_eHuE
The Representativeness Heuristic: Influence on Nurses’ Decision Making
The Representativeness Heuristic: Influence on Nurses’ Decision Making
A series of studies led by psychologist Gabrielle R. Chiaramonte in 2008 provides some clues as to why that may be. In the first study, 230 family doctors and internists were asked to evaluate two hypothetical patients: a 47-year-old man and a 56-year-old woman with identical risk factors and the “textbook” symptoms—including chest pain, shortness of breath, and irregular heart beat—of a heart attack. Half of the vignettes included a note that the patient had recently experienced a stressful life event and appeared to be anxious. In the vignettes without that single line, there was no difference between the doctors’ recommendations to the woman and man. Despite the popular conception of the quintessential heart attack patient as male, they seemed perfectly capable of making the right call in the female patient too.
But when stress was added as a symptom, an enormous gender gap suddenly appeared. Only 15 percent of the doctors diagnosed heart disease in the woman, compared to 56 percent for the man, and only 30 percent referred the woman to a cardiologist, compared to 62 percent for the man. Finally, only 13 percent suggested cardiac medication for the woman, compared to 47 percent for the man. The presence of stress, the researchers explained, sparked a “meaning shift” in which women’s physical symptoms were reinterpreted as psychological, while “men's symptoms were perceived as organic whether or not stressors were present.”
Discount above the median: future oriented
Discount above the median: future oriented
Discount above the median: future oriented
http://www.cdc.gov/pcd/issues/2015/14_0346.htm
http://www.cdc.gov/pcd/issues/2015/14_0346.htm
among participants who were below the median in mathematical ability, the majority said they preferred gold plans over bronze plans, regardless of which plan was labeled as gold.
Christakis and Fowler (2007) is a well-known study of over 12,000 individuals tracked over the course of more than 30 years, which finds clear evidence that the spread of obesity can come through social ties. The risk of an individual becoming obese increased by 57 percent if a friend became obese in a given timeframe.
Cochrane Review of 66 studies: no meaningful benefits
Christakis and Fowler (2007) is a well-known study of over 12,000 individuals tracked over the course of more than 30 years, which finds clear evidence that the spread of obesity can come through social ties. The risk of an individual becoming obese increased by 57 percent if a friend became obese in a given timeframe.
Cochrane Review of 66 studies: no meaningful benefits
For instance, a famous experiment showed that when half the class was randomly allocated coffee mugs and then all students were asked how much they were willing to pay for the mug (if they did not have one) or how much they were willing to accept for the mug (if they had one), those with mugs demanded much higher payments than the students without mugs were willing to pay (Kahneman, Knetsch and Thaler, 1990).
A real-world example of loss aversion in action is the tendency of many people to prefer lower-deductible, higher-premium insurance plans at a rate that is not predicted by risk aversion and the rational model alone: they overpay to avoid losses down the road
The vast majority (83%) of homeowners in the sample paid for this extra coverage. The prototypical homeowner in the sample paid $100 to reduce the deductible from $1000 to $500. Yet with claim rates under 5%, this additional coverage was worth less than $25 in expectation. It is possible to calculate how much each lower-deductible customer would have saved or lost ex-post had they instead held the $1000 deductible. On average these customers paid Öve times more than the extra insurance provided by a lower deductible was worth.
For instance, a famous experiment showed that when half the class was randomly allocated coffee mugs and then all students were asked how much they were willing to pay for the mug (if they did not have one) or how much they were willing to accept for the mug (if they had one), those with mugs demanded much higher payments than the students without mugs were willing to pay (Kahneman, Knetsch and Thaler, 1990).
A real-world example of loss aversion in action is the tendency of many people to prefer lower-deductible, higher-premium insurance plans at a rate that is not predicted by risk aversion and the rational model alone: they overpay to avoid losses down the road
For instance, a famous experiment showed that when half the class was randomly allocated coffee mugs and then all students were asked how much they were willing to pay for the mug (if they did not have one) or how much they were willing to accept for the mug (if they had one), those with mugs demanded much higher payments than the students without mugs were willing to pay (Kahneman, Knetsch and Thaler, 1990).
A real-world example of loss aversion in action is the tendency of many people to prefer lower-deductible, higher-premium insurance plans at a rate that is not predicted by risk aversion and the rational model alone: they overpay to avoid losses down the road
Active Choice: Select explicitly whether they preferred to remain in retail or switch to home delivery
Kahneman (2011) describes the priming effect as, if you have recently heard or been exposed to the word EAT, then you are temporarily more likely to fill in the following missing letter to SO_P as SOUP. On the other hand, if you had just heard or read the word WASH, you are more likely to fill this word in as SOAP.
Johnson and Goldstein (2004) show that rates of willingness to donate organs approach 100 percent in Austria but 12 percent in neighboring Germany, and 86 percent in Sweden versus just four percent in Denmark. The large differences are due primarily to what the default option is, and people failing to move away from the default; in places where the default is to presume somebody is willing to donate (an opt-out system), rates are higher.
In the study, the authors would first spin a wheel of fortune that was made to stop only at the values 10 and 65. They would then ask their students in a classroom whether the share of African nations in the UN was bigger or smaller than the number on the wheel; next, they would ask the students for their best guess as to the correct percentage of African nations in the UN. The average estimates of those who saw 10 and 65 were 25 percent and 45 percent, respectively, clearly suggesting that even meaningless anchors matter.
diminishing sensitivity, people tend to be more sensitive to the difference between $100 and $200 than between $900 and $1000
Active Choice: Select explicitly whether they preferred to remain in retail or switch to home delivery
Kahneman (2011) describes the priming effect as, if you have recently heard or been exposed to the word EAT, then you are temporarily more likely to fill in the following missing letter to SO_P as SOUP. On the other hand, if you had just heard or read the word WASH, you are more likely to fill this word in as SOAP.
Johnson and Goldstein (2004) show that rates of willingness to donate organs approach 100 percent in Austria but 12 percent in neighboring Germany, and 86 percent in Sweden versus just four percent in Denmark. The large differences are due primarily to what the default option is, and people failing to move away from the default; in places where the default is to presume somebody is willing to donate (an opt-out system), rates are higher.
In the study, the authors would first spin a wheel of fortune that was made to stop only at the values 10 and 65. They would then ask their students in a classroom whether the share of African nations in the UN was bigger or smaller than the number on the wheel; next, they would ask the students for their best guess as to the correct percentage of African nations in the UN. The average estimates of those who saw 10 and 65 were 25 percent and 45 percent, respectively, clearly suggesting that even meaningless anchors matter.
diminishing sensitivity, people tend to be more sensitive to the difference between $100 and $200 than between $900 and $1000
Chlorine tablet example
Active Choice: Select explicitly whether they preferred to remain in retail or switch to home delivery
Kahneman (2011) describes the priming effect as, if you have recently heard or been exposed to the word EAT, then you are temporarily more likely to fill in the following missing letter to SO_P as SOUP. On the other hand, if you had just heard or read the word WASH, you are more likely to fill this word in as SOAP.
Johnson and Goldstein (2004) show that rates of willingness to donate organs approach 100 percent in Austria but 12 percent in neighboring Germany, and 86 percent in Sweden versus just four percent in Denmark. The large differences are due primarily to what the default option is, and people failing to move away from the default; in places where the default is to presume somebody is willing to donate (an opt-out system), rates are higher.
In the study, the authors would first spin a wheel of fortune that was made to stop only at the values 10 and 65. They would then ask their students in a classroom whether the share of African nations in the UN was bigger or smaller than the number on the wheel; next, they would ask the students for their best guess as to the correct percentage of African nations in the UN. The average estimates of those who saw 10 and 65 were 25 percent and 45 percent, respectively, clearly suggesting that even meaningless anchors matter.
diminishing sensitivity, people tend to be more sensitive to the difference between $100 and $200 than between $900 and $1000
Chlorine tablet example
Active Choice: Select explicitly whether they preferred to remain in retail or switch to home delivery
Kahneman (2011) describes the priming effect as, if you have recently heard or been exposed to the word EAT, then you are temporarily more likely to fill in the following missing letter to SO_P as SOUP. On the other hand, if you had just heard or read the word WASH, you are more likely to fill this word in as SOAP.
Johnson and Goldstein (2004) show that rates of willingness to donate organs approach 100 percent in Austria but 12 percent in neighboring Germany, and 86 percent in Sweden versus just four percent in Denmark. The large differences are due primarily to what the default option is, and people failing to move away from the default; in places where the default is to presume somebody is willing to donate (an opt-out system), rates are higher.
In the study, the authors would first spin a wheel of fortune that was made to stop only at the values 10 and 65. They would then ask their students in a classroom whether the share of African nations in the UN was bigger or smaller than the number on the wheel; next, they would ask the students for their best guess as to the correct percentage of African nations in the UN. The average estimates of those who saw 10 and 65 were 25 percent and 45 percent, respectively, clearly suggesting that even meaningless anchors matter.
diminishing sensitivity, people tend to be more sensitive to the difference between $100 and $200 than between $900 and $1000
Upfront qualitative work – a lot of work, but it makes sure you’re answering the right questions
Kahneman (2011) describes the priming effect as, if you have recently heard or been exposed to the word EAT, then you are temporarily more likely to fill in the following missing letter to SO_P as SOUP. On the other hand, if you had just heard or read the word WASH, you are more likely to fill this word in as SOAP.
Johnson and Goldstein (2004) show that rates of willingness to donate organs approach 100 percent in Austria but 12 percent in neighboring Germany, and 86 percent in Sweden versus just four percent in Denmark. The large differences are due primarily to what the default option is, and people failing to move away from the default; in places where the default is to presume somebody is willing to donate (an opt-out system), rates are higher.
In the study, the authors would first spin a wheel of fortune that was made to stop only at the values 10 and 65. They would then ask their students in a classroom whether the share of African nations in the UN was bigger or smaller than the number on the wheel; next, they would ask the students for their best guess as to the correct percentage of African nations in the UN. The average estimates of those who saw 10 and 65 were 25 percent and 45 percent, respectively, clearly suggesting that even meaningless anchors matter.
diminishing sensitivity, people tend to be more sensitive to the difference between $100 and $200 than between $900 and $1000
Kahneman (2011) describes the priming effect as, if you have recently heard or been exposed to the word EAT, then you are temporarily more likely to fill in the following missing letter to SO_P as SOUP. On the other hand, if you had just heard or read the word WASH, you are more likely to fill this word in as SOAP.
Johnson and Goldstein (2004) show that rates of willingness to donate organs approach 100 percent in Austria but 12 percent in neighboring Germany, and 86 percent in Sweden versus just four percent in Denmark. The large differences are due primarily to what the default option is, and people failing to move away from the default; in places where the default is to presume somebody is willing to donate (an opt-out system), rates are higher.
In the study, the authors would first spin a wheel of fortune that was made to stop only at the values 10 and 65. They would then ask their students in a classroom whether the share of African nations in the UN was bigger or smaller than the number on the wheel; next, they would ask the students for their best guess as to the correct percentage of African nations in the UN. The average estimates of those who saw 10 and 65 were 25 percent and 45 percent, respectively, clearly suggesting that even meaningless anchors matter.
diminishing sensitivity, people tend to be more sensitive to the difference between $100 and $200 than between $900 and $1000