BEHAVIORAL ECONOMICS
OF HEALTH BEHAVIOR
Linh Bui
Role of Choice
“Choose a job. Choose a career. Choose a family…Choose
good health, low cholesterol, and dental insurance. Choose
fixed-interest mortgage repayments. Choose a starter
home…Choose your friends. Choose your future. Choose
life. But why would I want to do a thing like that? I chose
not to choose life: I chose something else. And the
reasons? There are no reasons. Who needs reasons when
you’ve got heroin??
_TRAINSPOTTING (1996) [Screenplay adapted from the novel
by IRVINE WELSH]
Contents
• Characteristics of behavioral economics
• Forms of behavioral economics
• Quantifying the Relative value of Addictive Drugs
and other commodities
• Demand curve
• Expenditure curve
• 2 strategies to assess demand for drugs/other commodities
Behavioral economics
• Understand decision making in population of
unhealthy or at-risk individuals
• Overconsumption (substance abuse, obesity, etc.,)
• Health behavior linked to commodities (tangible
consumable products)
Characteristics of behavioral
economics
• Emphasis on individual person
• With given the amount of time, money, effort, how we make
choices and what factors affect our decisions
Other
resources
• Understand the nature of rationality and irrationality in
human behavior
Homo economicus
Homo irrationalis
Game theory
“Prisoner’s dilemma”
Both remain silent
1st criminal
2nd criminal
A 6-monthsentence
A 6-monthsentence
1st criminal betrays Free
the other
A 10-yearsentence
Both betray each
other
A 5-year-sentence
A 5-year-sentence
Prospect theory
• Gambles (prospects) under conditions of risk are
inconsistent in reference to whether there are
gains or losses
• More conservative preferences for gains but
more risky preferences for losses
Prospect theory
Choice 1
Choice 2
50% chance to win $150
50% chance to lose $100
Definitely lose $100
50% chance of winning $50
and 50% chance of losing
$200
• Preferences are a function of :
– Absolute resources
– Relative changes in resources
Matching law
• Matching between individual behavior and relative
reinforcement available
• With a finite resources (time, money), how individuals access to
activities (eating, drinking, spending leisure time)
• Study substance abuse, tobacco and food
overconsumption: Relative value of alcohol, tobacco, food
remains high in spite of escalating health and psychological
costs (physical illness, financial burden,etc.,)
• Commodity overvaluation
• Impulsive temporal discounting
• Risky probability discounting: Willingness to accept greater
probabilities of negative outcomes to gain larger rewards
Matching law :Example
Overeating:
• Commodity overvaluation: Food (cheeseburgers ,etc.,) is
overvalued (at a certain price, consumption is higher and willingness
to pay is also higher)
• Impulsive temporal discounting: Overvaluation of immediate
rewards (pleasure of eating, reduce stress, etc.)
• Risky probability discounting: Willingness to accept greater
probabilities of obesity and other related health problems
Matching law: Example
• Commodity
overvaluation
• Impulsive temporal
discounting
• Risky probability
discounting:
What might be the critical insight from matching law?
The relative value of an outcome is jointly determined by the
outcome itself and alternative sources of reinforcement
Matching law: Example
• Commodity
overvaluation
• Impulsive temporal
discounting
• Risky probability
discounting:
What might be the critical insight from matching law?
The relative value of an outcome is jointly determined by the
outcome itself and alternative sources of reinforcement
Quantifying Relative value of Addictive
Drugs and other commodities
• Law of demand
• Cocaine vs money (Higgins et al. 1994)
• Relative value of a substance: Benefit-cost ratio
applied to a substance at a given price
Demand curve
Demand curve
Intensity of demand
Demand curve
Inelastic
Pmax
Elastic
Demand curve
• Elasticity : How consumption change relative to
price changes
• Inelastic vs elastic
• Elasticity index: Overall cost-benefit ratio
• Pmax (Price maximum): how far demand goes
before it starts to be affected by costs
Omax
Expenditure
curve
• Omax (Output maximum) = maximum amount of money (or other
resources) the individual was willing to spend on the commodity
 How much a person value a commodity or behavior
Laboratory demand paradigms
• In vivo consumption under escalating conditions of
response to cost
• Pharmacological studies of abuse liability and/or
therapeutic viability
• Avoid reliance on self-report
• High experimental burden, ethical issues
Purchase tasks
• Estimate drug consumption at escalating levels of
price
• Support for hypothesis: substance dependence and
overconsumption are characterized by overvaluation of
the commodities
• Self-report data but stable
Purchase tasks
• Dynamic changes in relative value of a drug:
Subjective states (craving and stress) drive motivation
for drugs
• Study substance abuse in a person’s natural
environment: measure the relative reinforcing efficacy
(socializing, watching television, exercising,etc.,)
Anhedonia: heavy drinkers and drug users report
less reinforcement from a variety of nonsocial
activities
Conclusion
• Characteristics of behavioral economics:
 Unit of analysis: individual person
 Understand the nature of rationality and irrationality in human
behavior
• Matching law : Theoretical framework to understand
overconsumption of addictive commodities
• Methods for demand assessment:
 Laboratory demand paradigms
 Purchase tasks
• How does behavioral economics link to previous
theories?
THE THEORY OF TRIADIC INFLUENCE
Levels of
Causation
Intrapersonal Stream
Biological/Nature
BIOLOGY/
PERSONALITY
Ultimate
Causes
1
Social/
Personal
Nexus
2
Sense of
Self/Control
Distal
Influences
7
13
8
h
Skills:
Social+General
14
Proximal
Predictors
b
c
B
C
Others’
Beh & Atts
9
i
k
j
l m
u
d
e
n
16
SOCIAL
NORMATIVE
BELIEFS
o
11
w
20
q
Values/
Evaluations
x
v
6
Interactions w/
Social Instit’s
p
Perceived
Norms
15
5
f
10
Motivation
to Comply
s
CULTURAL
ENVIRONMENT
4
Interpersonal
Bonding
19
A
Nurture/Cultural
3
SELF-EFFICACY t
BEHAVIORAL
CONTROL
Affect and
Cognitions
Cultural/Attitudinal Stream
SOCIAL
SITUATION
a
Social
Competence
g
Self
Determination
Expectancies
& Evaluations
Decisions
Social/Normative Stream
Information/
Opportunities
Knowledge/
Expectancies
17
F
18
ATTITUDES
TOWARD THE
BEHAVIOR
21
DECISIONS/INTENTIONS
D E
12
r
I
22
H
G
Trial Behavior
EXPERIENCES: Expectancies -- Social Reinforcements -- Psychological/Physiological
Experiences
23
J
K
Related Behaviors
23