Slides from Prof Ivo Vaev's (Implementation & Organisational Studies - Theme 5) presentation on behavioural economics at CLAHRC WM Programme Steering Committee meeting on 13th May 2015.

1. What is Unique about
Behavioural Economics?
Ivo Vlaev

2. SECTIONS
1. Theories of behavioural choices
2. Behavioural Frameworks
3. Intervention Examples

3. What makes you choose this
insurance policy?
What makes you pick that stock?
What makes you choose to
have that extra drink?

4. ”Traditional” explanations
Because it makes you FEEL good
Because of you BELIEVE it is possible
Because you PREFER it over the alternatives

5. Economic theory of rational choice is used for
understanding behaviour as utility maximisation

6. Traditional approaches in public health also describe
the causal “inner” states (beliefs, desires, etc.)

7. If not good enough then find more causal states...

8. and more ...

9. Then add some external factors too...

10. Still only ~ 3%-28% variance explained...
see Webb & Sheeran (2006) for a review

11. What we have learned over > 50 years of
research in behavioural economics?
“People know the price of everything, but the
value of nothing” Oscar Wilde
“It turns out that the environmental effects on
behaviour are a lot stronger than most people
expect” Nobel Laureate Prof Daniel Kahneman
“Information & information processing are
complements” Colin Camerer

12. The environment triggers the automatic system
• Controlled
• Effortful
• Rule-based
• Slow
• Conscious
• Rational
Reflective System
• Uncontrolled
• Effortless
• Associative
• Fast
• Unconscious
• Affective
Automatic System

13. A toy model of the automatic mind
I1 I4
I2
I5
I3
It
I6

14. £5 £50
Constructing our preferences

15. Constructing our beliefs
 Men inferred that they are at higher risk of heart disease
after recalling fewer risky behaviours
(Alter & Oppenheimer 2006; Rothman & Schwarz 1998)

16. Economics
Preference-
matching
Salop (1979)
Brynjolfsson et al. (2003)
Psychology
Choice
conflict
Tversky & Shafir (1992)
Dhar (1997)
Choice
overload
Iyengar & Lepper (2000)
Constructing our choices

17. SECTIONS
1. Theories of behavioural choices
2. Behavioural Frameworks
3. Intervention Examples

18. Determinants of Behaviour
Capability
Behaviour
Opportunity
Motivation
Fishbein et al.
“Factors influencing behaviour and
behaviour change”
(Handbook of Health Psychology, 2001)

19. Determinants of Behaviour
COM-B (Susan Michie et al UCL)

21. An amusing but powerful nudge at
Schiphol Airport
• Image of black fly
etched onto urinals
led to ‘spillage’
declining by >80%

24. • Published in March 2010
• Operating framework for
applying behavioural
insight to public policy
• Behavioural Insights
Team established in the
Prime Minister’s Office
Paul Dolan, Michael Hallsworth, David Halpern, Dominic King, Ivo Vlaev

26. SECTIONS
1. Theories of behavioural choices
2. Behavioural Frameworks
3. Intervention Examples

27. Prospect Theory: Application
Messenger
Advisor’s Expertise
• People learn from experience to pay more
attention to advisors who have given good
advice in the past.
• Consumers are more influenced by better
advisors
• Advisors have less influence on more
experienced and knowledgeable consumers
Advisor’s Trustworthiness
• People take more advice from trusted advisors
• Greater trust in advisors judged to have:
– Similar values
– Shared goals
– Similar intentions
• Being of the same sex and age increases the
attention paid to an advisor
Advisor’s Personality
• Consumers are more influenced by confident
advisors irrespective of advice quality
• Dissenting advisors are discounted unless
they are historically better than the consensus
• People are better at taking advice when
advisors are more distinct from one another

28. Would you donate 29p a day (for a year)?
Would you donate £106 (for a year?)
0
20
40
60
80
100
Yes No
0
20
40
60
80
100
Yes No
71% 29% 37% 63%
Incentives: loss aversion

29. Social Norms

30. Defaults
 Opt-in
 Opt-out
Check the box if you want to
participate in the organ donor program
Check the box if you don’t want to
participate in the organ donor program
Defaults

31. Check the box if you want to
participate in the organ donor program
Check the box if you don’t want to
participate in the organ donor program
Defaults

32. Defaults
Opt in Opt out
Percentage of adults registered as organ donors
Do Defaults Save Lives? Science 21 November 2003 Eric J.
Johnson and Daniel Goldstein

33. Salience: reducing clinic non-attendance
through SMS reminders
• Most common reason given in UK is forgetting appointment
• Systematic review of telephone and SMS reminders found that they
significantly improved attendance (Hasvold 2011)
• Cochrane Review on SMS messages for behaviour change in
general concluded that they have positive short-term behavioural
outcomes (Fjeldsoe et al. 2009)

34. Field experiment to improve reminders
• East London trust (3 hospitals) where SMS already used
• September 2013 – April 2014, >20,000 SMS message sent
• Five different types of appointment
• Rheumatology
• Gastroenterology
• Ophthalmology
• Cardiology
• Neurology
NHS REC: 13/NW/0508

36. Different messages used
Name Message
Control Appt at [hospital] on [Sep 16] at [10:00am]. To cancel or
rearrange call the number on your appointment letter.
Number Appt at [hospital] on [Sep 16] at [10:00am]. To cancel or
rearrange call 02077673200.
Norm We are expecting you at [hospital] on [Sep 16] at [10:00am]. 9
out of 10 people attend. Please call 02077673200 if you need to
cancel or rearrange.
Costs We are expecting you at [hospital] on [Sep 16] at [10:00am]. Not
attending costs NHS £160 approx. Call 02077673200 if you
need to cancel or rearrange.

37. 0
2
4
6
8
10
12
14
Control Number Norms Costs
DNARate
Message
DNA rate reduced by 3.4% points (29%)
3.4%
points
1,300 fewer DNAs
if applied to all
viable
appointments over
whole trial period
8,000 fewer if
applied over one
year in same
location
320,000 fewer if
applied nationwide

38. Priming – community level intervention

41. 15
46.9
33
21.6
Control Olfactory Male eyes Female eyes
HHC
olfactory vs
control
p<0.001
male eyes vs
control
p = 0.038
HHC improved in presence of aroma
and male eyes (but not female!)

42. Affect

43. Commitment
 African American women signing a behavioural contract, were
more likely to reach their exercise goals (Williams et al. 2006).
Exercisegoal

44. Ego: Encouraging people to join the organ
donor register

45. Ego: nudging to join the organ donor register

46. 1 Control 2 Norm
3 Norm + Pic 4 Norm + Logo

47. 5 Three Die 6 Nine Live
7 Reciprocity 8 Action