what is unique about behavioural economics? - prof ivo vlaev
TRANSCRIPT
What makes you choose this insurance policy?
What makes you pick that stock?
What makes you choose to have that extra drink?
”Traditional” explanations
Because it makes you FEEL good
Because of you BELIEVE it is possible
Because you PREFER it over the alternatives
Traditional approaches in public health also describe the causal “inner” states (beliefs, desires, etc.)
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
The environment triggers the automatic system
• Controlled
• Effortful
• Rule-based
• Slow
• Conscious
• Rational
Reflective System
• Uncontrolled
• Effortless
• Associative
• Fast
• Unconscious
• Affective
Automatic System
Constructing our beliefs
Men inferred that they are at higher risk of heart diseaseafter recalling fewer risky behaviours
(Alter & Oppenheimer 2006; Rothman & Schwarz 1998)
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
Determinants of Behaviour
Capability
Behaviour
Opportunity
Motivation
Fishbein et al.“Factors influencing behaviour and behaviour change”
(Handbook of Health Psychology, 2001)
An amusing but powerful nudge at Schiphol Airport
• Image of black fly etched onto urinals led to ‘spillage’ declining by >80%
• 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
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
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
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
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
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
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)
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
Different messages used
Name Message
ControlAppt at [hospital] on [Sep 16] at [10:00am]. To cancel or
rearrange call the number on your appointment letter.
NumberAppt at [hospital] on [Sep 16] at [10:00am]. To cancel or
rearrange call 02077673200.
NormWe 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.
0
2
4
6
8
10
12
14
Control Number Norms Costs
DN
A R
ate
Message
DNA rate reduced by 3.4% points (29%)
3.4
%
poin
ts 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
15
46.933
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!)
Commitment
African American women signing a behavioural contract, were
more likely to reach their exercise goals (Williams et al. 2006).
Exer
cise
go
al