HEALTH ECONOMICS (PART 2) Schrader White – H 571 Week 6

Overview  Behavioral Economic Decision-Making Delay Discounting Probability Discounting  I will go over these theories in a monetary sense, and then apply them to health behavior

Delay Discounting 101  Behavioral economic measure of impulsivity  “… how deeply a reward is discounted based on its delay in time”  The balancing of small pleasures in the present vs. large benefits in the future.  Generally driven by disproportioned priorities

Example of Delay Discounting  The Ant and the Grasshopper (Aesop BCE)  The grasshopper has fun over the summer, but starves in the winter. While the ant gives up idle pleasures over the summer to gather food, then has plenty of food when winter comes.  Are you the ant? Or the grasshopper?

Economics of Delay Discounting A person’s indifference point: When the combination of amount and delay make the smaller immediate award equal to the larger delayed reward. The smaller the delay to provoke a switch, the more impulsive the individual is considered. Delay Discounting Immediate RewardDelayed Reward $90 Today$100 Today $90 Today$100 in 1 Day $80 Today$100 in 7 Days $70 Today$100 in 28 Days $60 Today$100 in 180 Days $50 Today$100 in 365 Days $40 Today$100 in 1825 Days ImpulsiveSelf-Controlled

Application to Health Behavior  People seek immediate gratification at the expense of long-term gains Drinking, Smoking, Illicit Drug Use, or Eating (overconsumption)  These behaviors are “enjoyable” in the short-term, but have lasting effects on physical and psychosocial health

Application to Health Behavior  People with overconsumption disorders know that larger delayed outcomes – physical health and vocational success – are very important to them, but nonetheless tend to persist and either maintain the problem or make it worse.  “Inability to delay gratification”  Overvaluation of immediate rewards

Examples  You want to be a healthy body weight more than you want a piece of cake (in the long run) – but if cake is immediately available, it can be eaten without much effort, while maintaining a healthy body weight will take more effort. An impulsive person would eat the cake, a self-controlled one would resist temptation.  You swore off cigarettes 2 months ago, but would rather smoke right now, than continue to maintain your non- smoking lifestyle - which takes more effort and isn’t as immediately rewarding to you as smoking. An impulsive person would smoke, a self-controlled person would not.

Findings from Research  Various Research found that substance abuse and overconsumption aren’t alone in regards to delay discounting. Other health behaviors fit too!  Can anyone think of any other health behaviors? Also, how does delay discounting apply?

Furthermore,  Various Research found that substance abuse and overconsumption aren’t alone in regards to delay discounting. Other health behaviors fit too!  Can anyone think of any other health behaviors? Also, how does delay discounting apply? Pap smears, mammograms, prostate exam, cancer screening, dentist appointments, cholesterol testing, flu vaccines

Thus, “Overvaluation of immediate outcomes at the expense of future outcomes appears to play a role across a wide range of health behaviors.”

Probability Discounting 102  Similar to discount disability, but decline in reward’s value is based off of its uncertainty  Refers to how sensitive a person is to risk associated with rewards  A measure of risk taking  Identifies people as Risk-Averse or Risk-Prone

Economics of Probability Discounting Probability Discounting Certain RewardProbabilistic Reward 100% Chance for $90100% Chance for $ % Chance for $9099% Chance for $ % Chance for $8075% Chance for $ % Chance for $7050% Chance for $ % Chance for $6025% Chance for $ % Chance for $5010% Chance for $ % Chance for $401% Chance for $100 Risk Averse Risk Prone

Application to Health Behavior  Many unhealthy behaviors do not result in negative outcomes in every instance  Each cigarette, drink, and bag of drugs is probabilistically related to negative outcomes, not certain negative outcomes. Unprotected sex, poor medicine compliance, delayed cancer screenings  If a person is willing to accept the risk of negative outcomes for greater reward, their “cost-benefit” ratio is acceptable.

Relation to Other Theories  Value-Expectancy Theory People will change behavior if they anticipate value to that change Does not account for delay in reward or probability of reward occurring  Delay Discounting focuses on the reward’s delay  Probability Discounting focuses on the likelihood of the reward occurring

16 DECISIONS/INTENTIONS SOCIAL S ITUATION BIOLOGY/ P ERSONALITY THE THEORY OF TRIADIC INFLUENCE ATTITUDES TOWARD THE BEHAVIOR SOCIAL NORMATIVE BELIEFS Trial Behavior EXPERIENCES: Expectancies -- Social Reinforcements -- Psychological/Physiological SELF-EFFICACY BEHAVIORAL CONTROL Nurture/CulturalBiological/Nature Intrapersonal StreamSocial/Normative StreamCultural/Attitudinal Stream Distal Influences Proximal Predictors Levels of Causation Ultimate Causes Social/ Personal Nexus Expectancies & Evaluations Affect and Cognitions Decisions Experiences a b c d e f g h i j k m n o p q r s t u v w x Related Behaviors J K C F I B E H A D G CULTURAL E NVIRONMENT

Well, now the fun is over… Questions?