Behavioral Economics and Public Health Policy

Neoclassical economics, behavioral economics and public health: an introduction

Neoclassical economics suggests that individuals are rational actors who aim to maximize their long-term best interest and have stable preferences- no matter what situation decisions are made in. Such a perspective has influenced the design of public health policy including how to tax harmful substances such as tobacco and alcohol. However, such a perspective has proved ineffective.

In contrast to neoclassical economics, behavioral economics suggests that individuals decisions and behaviors can be influenced by the environment. This theory posits that rationality can be influenced by factors such as impulsiveness, limited willpower, social norms, and the context or environment in which choices are made.

The behavioral economics approach aims to better understand behaviors, taking into consideration the environment. It has been suggested to have the potential to improve the effectiveness of public health policy and at a low cost. As a result, concepts from behavioral economics are now being used by governments worldwide to improve health, decision making, and government efficiency.

However, for effective integration of behavioral economics into government public health programs and policies careful design and continual evaluation are needed.

Nudge

Thaler and Sunstein described a nudge as “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.” Health is recognized as a good area to apply nudges to. Concepts from behavioral economics have been applied to public health policy and led to improvements in health attitudes and behaviors.

Government nudge units

The Behavioral Insights Team (BIT) in the UK is an example of a Government backed unit that is dedicated to researching ways to incorporate behavioral economics in public policy. The BIT has also been called a 'nudge unit'. Other nudge units have been created in Australia, Denmark, and by the World Bank.

Behavioral economics approach

Behavioral economics concepts that are the most relevant for public health policy include time-inconsistent preferences, bounded rationality, status quo bias, framing effects, availability heuristic, and social norms. Head to the original paper and see table 1 for examples of how concepts of the approach can inform public health policy. Nudge units argue that incorporating behavioral economics approaches to policy interventions can achieve significant impact at low cost.

Further to the concepts described in table 1, the BIT has outlined key lessons of their approach with the acronym MINDSPACE as shown in the image below:

Nudging to initiate behavior modification

Nudges can be effective because small changes can lead to behavior modification. With studies finding that even simple nudges such as an email to prompt an individual to make a plan can increase the probability of the subject eventually engaging in the prompted health behavior, such as healthy eating. Another example of where behavioral economics has been used in public health is in terms of highlighting descriptive norms about vaccines among a group can significantly reduce public concern about vaccines and promote intentions to vaccinate.

Nudges to improve diet, physical activity, and obesity

Changing the the environment in which choices are made (choice architecture) even in small ways to increase the convenience and appeal of healthier options can increase fruit and vegetable consumption, although how long these changes last has not been well studied. Other research has highlighted how altering the default drinks and side dishes in children’s meals to healthier options in restaurants (e.g., changing the default beverage from sugar sweetened soft drinks to water, or the default side from french fries to apple slices) can improve health choices. Other examples are outlined in this paper.

Limitations

To use nudges in health policy, it is important to first understand the decision-making process around the targeted behavior such as smoking or eating fast food. It is also important to prevent companies from nudging consumers toward the unhealthy behavior for example through special promotions or advertisements which may influence consumers’ perceptions of social norms.

Other considerations of incorporating behavioral economics into public health policy include the fact that nudging as a term is pretty vague and so are the interventions that are associated. Another issue that has been raised is that behavioral economics could lead to paternalism because it suggests that people’s own interest to have their choices restricted by government- which is often not what people want and can easily become coercive.

Research needs

Behavioral economics and nudging is a pretty new field. As a result there is little research and what has been done is hard to generalize to other areas. There is also some degree of publication bias whereby what has been published is largely positive. Furthermore, there is little information about long-run behavior changes in response to these policies and so longer term studies are needed, as are continual evaluations of existing policies.

Links with my research

I find behavioral economics and nudging very interesting and could be good initial theoretical frameworks upon which to base my research. As a result, during my research of the Soft Drinks Industry Levy in the UK I will be keen to investigate: (M) who the messengers are, (N) perceived norms of soft drink consumption, (D) the impact of manufacturers reformulating soft drinks to make the lower sugar options the default, (P) subconscious cues in stores and in the media, (A) emotions associated with the levy and its impact on decisions, (E) and whether how people respond to the levy is affected by levy how people feel about themselves. Framing is also significant and has been found to impact attitudes towards health. I will investigate how these factors impact behaviors associated with soft drink consumption and health.