behavioral economics in health

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Introduction to Behavioral EconomicsResearch Group

+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?

+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.”

+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%

+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

+Concepts in Behavioral Economics


Scenario One: Potential Heart AttackA 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 AttackA 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%


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%

+Concepts in Behavioral EconomicsPresent Bias

+Behavioral Economics In Action


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?

+Concepts in Behavioral EconomicsLoss Aversion


Germany Austria Sweden Denmark12% ~100% 86% 4%


Germany Austria Sweden Denmark12% ~100% 86% 4%

Status Quo Bias

+Concepts in Behavioral EconomicsActive Choice

Active Choice

+Concepts in Behavioral EconomicsAltruistic Capital

Altruistic Capital

+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


It would be shortsighted to overlook simple, inexpensive,

and powerful behavioral interventions that can help close the gaps in the global

health system.

behavioral economics in health

Healthcare