Op-Ed Contributors - Economics Behaving Badly. IT seems that every week a new book or major newspaper article appears showing that irrational decision-making helped cause the housing bubble or the rise in health care costs. Such insights draw on behavioral economics, an increasingly popular field that incorporates elements from psychology to explain why people make seemingly irrational decisions, at least according to traditional economic theory and its emphasis on rational choice.
Behavioral economics helps to explain why, for example, people under-save for retirement, why they eat too much and exercise too little and why they buy energy-inefficient light bulbs and appliances. And, by understanding the causes of these problems, behavioral economics has spawned a number of creative interventions to deal with them. But the field has its limits. As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address.
Or take conflicts of interest in medicine. Automated Hovering in Health Care — Watching Over the 5000 Hours. The dominant form of health care financing in the United States supports a reactive, visit-based model in which patients are seen when they become ill, typically during hospitalizations and at outpatient visits. That care model falls short not just because it is expensive and often fails to proactively improve health, but also because so much of health is explained by individual behaviors,1 most of which occur outside health care encounters. Indeed, even patients with chronic illness might spend only a few hours a year with a doctor or nurse, but they spend 5000 waking hours each year engaged in everything else — including deciding whether to take prescribed medications or follow other medical advice, deciding what to eat and drink and whether to smoke, and making other choices about activities that can profoundly affect their health.
The increasing attention being paid to those 5000 hours takes various forms. Three recent developments suggest that automated hovering may offer promise. What a difference a nudge in the right direction can make. Nudge, nudge: better wording could encourage people to pay overdue fines. Photo: Jeffrey Chan Deep inside the NSW Department of Premier and Cabinet there's a team thinking up ways to ''nudge'' you to behave differently without you even knowing it.
The scheme is based on research by behavioural economists who have discovered people can be steered towards superior decisions for themselves - and society - by changing the way choices are presented. The hope is to influence behaviour with cleverly targeted nudges rather than more red tape. In 2010 the British government set up a Behavioural Insights Team - dubbed the ''nudge unit'' - to investigate how nudges could be used in Britain. Its methods have now been imported to Macquarie Street. A senior member of Whitehall's nudge unit, Rory Gallagher, was hired by Barry O'Farrell's department at the end of 2012 to help find ways to nudge the citizens of NSW. Advertisement Britain's nudge unit used this tendency to improve tax compliance.
Www.biomedcentral.com/content/pdf/1472-6963-8-272.pdf. Behavioral Economics and Public Health at TED2010. Feb 16, 2010, 12:58 AM, Posted by Paul Tarini I particularly enjoyed the TED talk by Elizabeth Pisani, author of the book, The Wisdom of Whores. A former journalist whose work now focuses on drug users and sex workers, Pisani has a PhD in infectious disease epidemiology from the London School of Hygiene and Tropical Medicine and spoke on the second morning, one day after Princeton’s Daniel Kahneman, the father of behavioral economics.
Pisani voiced frustration during her talk about the mismatch between government policies and public health approaches and what influences the choices sex workers and drug users make. Her argument drew on the analytical framework behavioral economists like Kahneman have used so effectively to describe and understand the choices people make. Pisani dismissed the field of public health as being limited by its reliance on a rational model to develop intervention programs. Thoughts? Tags: Events , Ideas. MINDSPACE Behavioural Economics. Update: Professor Cass Sunstein, co-author of Nudge: Improving Decisions about Health, Wealth, and Happiness, will speak at the Institute for Government on 22 March 2013.
Background New insights from science and behaviour change could lead to significantly improved outcomes, and at a lower cost, than the way many conventional policy tools are used. MINDSPACE: Influencing behaviour through public policy was published by the Institute for Government and the Cabinet Office on 2 March 2010. The report explores how behaviour change theory can help meet current policy challenges, such as how to: reduce crime tackle obesity ensure environmental sustainability. Today's policy makers are in the business of influencing behaviour - they need to understand the effects their policies may be having. Blogs MINDSPACE grows up – behavioural economics in government Reaction "brilliant" - Sir Gus O'Donnell, Cabinet Secretary "this is the best report of its kind - it is reflective and practical at the same time.