Making sense of behavioural economics
- Published on Thursday, 17 April 2014 14:54
- Written by Patrick Ladbury
There has been a huge growth of interest in behavioural economics over the last 15 years, numerous books have been written, The Cabinet Office set up a Behavioural Insights Team to apply behavioural economics to government policies with their MINDSPACE approach and other agencies have started to offer expertise. But what is behavioural economics and how can they be used within Public Health?
Commercial marketers have been using behavioural economics and understanding the short cuts people use to make decisions, can Public Health do the same? Here, we look at some of the more well-known short cuts or 'heuristics' and how they have been applied.
What is behavioural economics?
Economics presumes that people make decisions in a rational manner, weighing up the pros and cons before making a decision. For years governments have used this approach to influence behaviour through communications, telling people what is good for them or using control measures such as legislation to deter people from certain behaviours. However, people don't make rational decisions and behavioural economics studies why? Some of the more common reasons people make irrational decisions are:
- Loss Aversion: People value what they have more than what they can gain – one of the reasons diet's often fail as people don't like giving things up
- Herding: People have a tendency to follow the crowd and do what others are doing – If you are in a bar and others are drinking, you are likely to continue drinking with the people around you
- Default: People take the easiest option and will go with the status quo – which is why companies created automatic yearly renewal policies
- Affect: People make different decisions about the same behaviour when they are emotionally aroused compared to when they are not - people say they will use a condom but often don't
Application of behavioural economics
It is one thing being aware of how people make irrational behaviour choices, it is another using that knowledge and applying it to public health programmes to influence positive health behaviours – and then proving it. The Behavioural Insights Team have made evaluation, through pre-testing and randomly controlled trials, an essential part of their work, a discipline all programmes should follow.
However most Behavioural Economics programme have focussed on influencing one off behaviour changes (you either do the behaviour or you don't i.e. you become an organ donor or enrol in your company pension or you don't). There are limited examples of it being used to influence sustained behaviour change. There is also the danger that behavioural economics is applied ineffectually.
MINDSPACE has simplified behavioural economics so people can understand it. However because they can understand it, they think they can apply it. They use every heuristic at the same time rather than selecting the right heuristic for the right behaviours with the right audience.
The real opportunity for public health programmes is combining behavioural economics with marketing to achieve social goals – putting social sciences, such as behavioural economics together with marketing creates effective social marketing! To talk to the social marketing specialists contact Hitch.