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The Increasing Challenge of Mental Health Problems

The key assumption in neoclassical economic theory is that individuals are perfectly capable of taking rational decisions, translated into the homo economicus ideal-type. But what happens if individuals are not in perfect health and have their decision-making process threatened?

Lately, much has been discussed about the rise in mental health issues, especially among youngsters. In a fast-changing world full of uncertainties, individuals may constantly focus on achieving perfection and success under highly competitive environments, threatening the efficiency of their decision-making processes. A recent report by Craig Thorley for the Institute for Public Policy Research in the UK shows that the number of students under 25 years of age disclosing a mental illness to their institution has increased fivefold over the past decade. What are the causes behind this?

The combination of academic, financial and social pressures is the key to understanding what motivated this phenomenon. It is undeniable that individuals have been living in environments that undermine mental health. For instance, a survey published by stem4, a teenage mental health charity, reveals that the top anxieties among 12-to-16 years old are exam worries, work overload, friendship concerns, lack of confidence and self-esteem, and feelings of being overwhelmed. In parallel, this new generation of youngsters feels more financially pressured given their large student debts, under the expectation that such investments will pay off in the future. Under scarcity of time and mental health, as defined by Mullainathan and Shafir (check our review of their book on Scarcity here), individuals have their “mental bandwidth” depleted, i.e. they become less mentally efficient. What can be done to avoid this?

mentalhealthtags

There is a need to not only prepare students better for academic challenges, but also to provide them with good health support systems inside universities. However, there are three underlying challenges. First, it is necessary to make students speak out for their feelings and enlist the help of a specialist to cope with pressure and avoid loneliness. Second, academic institutions ought to provide easy access to university counseling services, though it is not always the case that supply meets demand, and in less developed countries this type of service may not even exist. Third and more importantly, students may not realize that they need help, or that there is someone willing to listen to them.

Under these circumstances, the national health service and private institutions need to combine forces to find an innovative solution to the rise of mental illnesses. We need to understand its causes and how to tackle it, because it has huge economic costs. Also, we must work towards a society that is sensitive to these issues and realizes the importance of mental well-being.

References

Shafir, E. & Mullainathan, S. (2013). Scarcity: Why Having So Little Means So Much. Times Books, New York.

Thorley, C. (2017). Not by Degrees: Improving student mental health in the UK’s universities, IPPR.

The Guardian (March 26, 2017). Mental health problems rife among teenagers but teachers lack skills to help by Rachel Ellis.

The Guardian (August 29, 2017). The rise in student mental health problems – ‘I thought my tutor would say: deal with it’ by Donna Ferguson.

The Guardian (September 05, 2017). More students than ever suffer mental ill health. We must change our toxic world by Nihara Krause.

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When our brain decides for us… And without our permission

(Originally published in Slovak at mindworx.net)

Most of us probably believe that we are in control of our own decisions. We have our opinions, beliefs and principles, we know what we like and dislike and we always decide in accordance with our preferences.

However, this is not entirely true. Our brain reacts to all kinds of cues from the external environment and so our behaviour and decision making depend heavily on these. Even if we do not realise it.

MINDSPACE FRAMEWORK

Since there are a lot of these external cues, it is useful to categorise them to be able to analyse them better. One of the possible models is the “MINDSPACE” framework, created a few years ago in the UK by the Cabinet Office and the Institute for Government. Obviously, such models do not include all the possible factors that influence our behaviour, but do describe the most important ones. Thus, it serves as a good basis for a better understanding of human decision making.

The name MINDSPACE is an acronym made of the first letters of the main motivators of human behaviour. These are Messenger, Incentives, Norms, Defaults, Salience, Priming, Affect, Commitments and Ego. Let’s now have a look at each of them.

mindspace-1

Messenger

It is true that how we perceive information depends on their source. Different researchers have shown that we are more likely to listen to what the experts say, but also to accept advice from people similar to us in some ways. On the other hand, if we get advice from someone we dislike, it is probable we will not take it into account no matter how good it is.

Incentives

They include everything that motivates us – either physical motivators (such as money or other non-financial rewards) or psychological motivators (like our intrinsic motivation to do something good for the others). It is useful to know how we react to various motivators and which of them work best in various situations. In general, it is true that losses loom larger than gains, so a potential loss can be a better motivator than a potential gain. Also, our perception is relative – the same amount of money can be seen as too small or too large depending on the reference point.

Norms

More precisely, social norms. People tend to be influenced by what other people are doing. Usually nobody wants to be the “outsider” and have fingers pointing to them, just because they are different.

Defaults

People tend not to change the pre-set options, even for important decisions. The countries in which you are automatically considered to be an organ donor, unless you opt out, have a much larger proportion of donors than the countries in which you have to opt in to become one.

Salience

Logically, our behaviour is influenced by the things we pay attention to. And since there is a huge number of stimuli out there, our brain has to be selective – it pays attention mostly to what is new, simple and different. Sometimes, though, the brain actively seeks for cues that facilitate the decision making. For instance, it may search for an “anchor”, which is the information (mostly numerical) that is used as a basis for making a (numerical) judgement. However, such information does not need to be relevant in a given context and even a randomly picked number can influence how we decide.

Priming

Our behaviour is influenced also by our senses and at the unconscious level. The exposure to a certain type of words, sounds or smells can have a large impact on our behaviour. For example, the participants of an experiment that were required to read words related to old age left the room in a slower pace than the other participants. Or the smell of an all-purpose cleaner in a school canteen prompted the students to leave their tables cleaner.

Affect

It is nothing new that the emotions play an important role in our decision making. What is a bit more surprising is the fact that they influence us even when we do not realise it. An experiment has shown that when a mortgage offer included a picture of a smiling woman, the demand for the mortgage increased in the same amount as if the interest rate of the mortgage decreased by 25%.

Commitment

Commitments and promises, mainly the public ones, determine how we behave. If you struggle to do something, it is useful to commit yourself in some way. Tell your friends that you will stop smoking by a certain date. This will force you to do everything to accomplish our goal, just to avoid the shame of admitting the failure in front of people that are important to you.

Ego

Our actions should be in accordance with what image we have, or we would like to have (in our own eyes, or in the others’ eyes). For instance, men are more willing to contribute to charities if they are approached by attractive women, because in this way they manage to keep a good image in the eyes of the opposite sex.

SO, WHAT?

The MINDSPACE model has been created mainly for public institutions with the aim of improving public policies. Many governmental programmes are unsuccessful exactly because they are not designed for real people, but for “people” that are described by the theoretical (mainly economic) models.

This does not mean, though, that the framework is useless outside the public sector. Each one of us can learn a lot from it. If we better understand how our brains work and what influences our behaviour, we will be able to make better decisions, develop more successful products or provide better services and have better relationships with people around us.

Source: https://www.instituteforgovernment.org.uk/sites/default/files/publications/MINDSPACE.pdf

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Nudges for a healthy lifestyle – Part II

In the article Nudges for a healthy lifestyle – Part I”, we talked about the nudges created by governments around the world related to improving people´s lifestyles.

If you wonder why governments care about lifestyles of their citizens, the reason is mainly money. Unhealthy diet, frequent consumption of addictive substances (mainly alcohol or tobacco), and lack of physical movement are all widespread and may lead to “non-communicable diseases”, such as diabetes or cardiovascular diseases. The governments have two possibilities – either encourage the change in lifestyles and decrease the occurrence of such diseases or pay for the cure. Obviously, prevention is a cheaper choice and in case of lifestyle issues, also feasible.

Moreover, if governments understand human behaviour, their attempts to change it will probably be more successful. That is why Behavioural Economics can be helpful in this domain.

Part I of this article was dedicated to the nudges related to food consumption. Part II will discuss nudges concerning tobacco and alcohol consumption and physical movement.

 

As for physical movement, there has been a very simple nudge trial conducted in the City of Melbourne in Australia. To encourage people to take the stairs instead of elevators in a train station building, the City of Melbourne had the stairs painted in a colourful and catchy way (see Picture 1). It may not seem like  a very strong nudge; why would anyone struggle on the painted stairs if they can see them also from the elevators? But it seems that the citizens of Melbourne did not think like this – according to a report by the Behavioural Insights Team (that collaborated on this trial), the usage of the stairs increased by 25% during off-peak times and by 140% in  peak times!

Stairway-art-Zest-Events-Southern-Cross-Station-Melbourne

Picture 1

Source: Zest Events

 

Moving to tobacco consumption, the nudges used around the world are quite uniform. There are two major manipulations that have been implemented.

1) The first one is plain packaging, whereby the tobacco producers cannot use the package as a marketing space and have to comply with rules for uniform font, size and colour of the text, as well as uniform package colour. The space previously used by companies is now dedicated to health warnings, both in words and in pictures (see Picture 2). The rationale behind such a policy is that it decreases the appeal of tobacco products and at the same time, gives more importance to the health warnings, which should deter people from smoking. It seems like a good idea at first glance, but when one thinks about it more, the following doubts arise. Firstly, there is a large amount of brand loyalty among smokers, so it is not probable that they will stop smoking only because of a change in design. Secondly, there is the optimism bias that goes against the effectiveness of health warnings. People usually overestimate the probability of positive things happening to them and underestimate the probability of the negative ones. Hence, when they see a health warning, they may simply think “it happens, but to the others, not me”.

Copy_right_Action_on_Smoking_and_Health_story

Picture 2

Source: WHO

2) The second widespread anti-smoking nudge-based policy is the tobacco display ban. In the countries where it has been introduced, tobacco products have to be displayed so as not to be visible to the customers in the shops (with the exception of specialised tobacco shops, of course). Again, such policy goes against marketing possibilities of tobacco producers and the hope is that it will decrease the amount of impulse purchases, which are frequent mostly among the young.

There are several papers trying to evaluate the impact of these two anti-smoking policies, but there is no clear conclusion to be drawn. It seems that smoking is a very complex issue and is cannot be easily solved by using only nudges. Another issue is that in many countries, these policies have been implemented only recently, so it is too early to know their impact. Anyway, even if the nudges are not the solution in this case, maybe they could still complement some other policies to make a real change.

The last lifestyle issue is alcohol consumption and there is a very nice example of the use of nudges in this domain. At the Northern Illinois University, a simple marketing campaign based on social norms (i.e. informing the students about how many drinks other students have when they party) was enough to decrease students´ binge drinking.

(If you want to know more about this particular policy, see the article A Social Norms Approach to Preventing Binge Drinking at Colleges and Universities.)

To conclude both articles about the nudges related to healthy lifestyles, I would like to say one thing. Clearly, nudges do not automatically solve all problems. But as long as they are low-cost and do not harm anyone (such as removing the salt shakers from restaurant tables or painting the stairs in a train station), I think they are worth trying, because even a small positive difference is a step forward towards a healthier life.

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Nudges for a healthy lifestyle

Part I – Food related nudges

Nowadays, non-communicable diseases (such as cardiovascular diseases, chronic respiratory diseases or diabetes) are a serious problem, killing around 38 million people every year according to WHO. An interesting fact about them is that they are often caused by an unhealthy lifestyle – tobacco and alcohol consumption, unhealthy diet and lack of physical activity.

Obviously, governments worry about the health spending and so they try to come up with programs to solve these issues. But it seems that many times they fail to deliver the desired results. Why is that?

One of the reasons may be that the programs do not provoke the right actions. A traditional approach is to give people information, based on the assumption that they engage in unhealthy behaviours, because they do not know how harmful they are. Another traditional solution is to increase the costs related to certain behaviours, such as increasing the taxes on tobacco or alcohol. A common problem of these methods is that they may not lead people into action. They rely on the fact that people are rational, always weigh the costs and benefits and decide to do what is best for them.

But these programs fail to take into account that people may behave differently in reality. A mere information about the risks of smoking is not sufficient, since people suffer from an optimism bias – they do not believe that something bad could happen to them. There is also a present bias – the cigarette “now” is so pleasurable and the risk of cancer is “so distant”, which is why people will procrastinate their decision to join a stop smoking program.

The behavioural approach means taking these biases into account and creating nudge-like interventions that really lead to actions and consequently to a better health.

Here are some examples of nudges aiming at improving our diet:

1) A very successful and simple initiative comes from the Nordic countries – they use food labels to simplify decision-making process while grocery shopping. The Nordic Council of Ministers established a set of nutritional criteria, which have to be met in order for a product to get the Keyhole label. People know that if they see the sticker, it means the product is good for their health. Some evaluations of the Keyhole label showed that the level of awareness about it is really high (more than 90 %) and that it truly helps people to choose healthier food products.

Nøglehullet

http://www.norden.org/en/news-and-events/images/grafik/logos/noeglehullet/view

2) However, such labelling strategies do not work everywhere. Some countries (e.g. Australia, UK) came with the idea of using the Traffic Lights label, which uses the colours of traffic lights to indicate if a product is healthy (green), unhealthy (red) or somewhere in between (amber). It may seem like a good idea, but somehow the results from the countries that are using this label are mixed. Also, the Traffic Lights label faces a lot of reluctance from food producers. For example, several countries of the European Union fought hard against its use, in order to avoid their typical products being labelled red (e.g. Italy, famous for its meat products, among other things).

fsafoodlabels

http://www.foodpolitics.com/?s=traffic+lights

3) In the US, they have the Smarter Lunchrooms Movement that uses nudges in school canteens. It is run by behavioural economists from Cornell University and it seems to be quite successful. The interventions are minimal, such as changing the names of the food or changing the ways in which the food is displayed, but it has some positive effects on children. I bet you would also prefer to eat “X-ray Vision Carrots” than “The Food of the Day”.

4) To conclude, I mention my favourite food nudge that comes from Argentina. The problem with hypertension (i.e. high blood pressure) in the city of Buenos Aires became very widespread and so the city decided to remove salt shakers from the tables in the restaurants. Now, consumers may get salt only if they ask for it. This way the liberty of choice is preserved, but the choice architecture changes in favour of breaking the automatic habit of adding salt to your meal. The only pity is that there is no study evaluating the impact of this nudge!

Do you know about some other food nudges that governments around the world used to improve their citizens’ diets? Let us know about them!

Next article: Part II – nudge interventions to deal with smoking and alcohol consumption

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Introduction to Behavioural Economics

What is behavioural economics (BE)?

After World War II, human rationality became the core hypothesis of neo-classical economics. Even though “rationality” can have different meanings, it is very precisely defined for the economists – an assumption that we all maximise our utility functions. To this end, we take into account all the available information, think about everything that may happen in the future and make rational expectations about it. Moreover, our preferences are stable and no emotions influence our decision-making process.

But do we actually behave in this way? If you feel like you do not fit the description above, you’re not alone. It turns out that people systematically deviate from the rational agent model. We all certainly let our emotions be a part of our decision process; we do not think about all the possibilities and all the future periods. We tend to prefer different things in different moments. Does this make us irrational though?

No. It just proves that the assumptions of neo-classical economics are a bit too strong. However, the simplifying assumptions made by economists are very useful when one wants to create economic models. But when one wants to understand people´s real behaviour and induce them to make better choices, imposing too many assumptions does not seem like the best strategy. This is basically why behavioural economics comes into picture. Unlike other economists, behavioural economists do not assume that people are fully rational. Instead, they take into account their biases and ways of making decisions when trying to model and change their behaviour.

How was BE born?

How a new field like BE develop? If there is a generally accepted theory, how does a new one come into picture and how do people change their view?

First, there must be doubts. There must be someone that does not think that the given theory is perfect and come up with a new one. Then, the toughest part – the new theory must be accepted by the experts in the field in order to survive.

One of the most famous challengers of the rational agent theory was Maurice Allais, who came up with the famous “Allais paradox”. He showed that people’s choices over lotteries were influenced by the addition of the same independent event across lotteries, something that a rational thinker would not take into account (check out http://mathworld.wolfram.com/AllaisParadox.html).

However, by far the most important work was done by two psychologists – Daniel Kahneman and Amos Tversky (for an overall review of their ideas, try reading Kahneman’s book “Thinking Fast and Slow”). In the 1960s and 1970s, they started to run experiments and proved that not only do people deviate from rationality, but that they do so in a systematic way.

But this does not mean that all the economists changed their beliefs immediately and rewrote the theories. In fact, BE is still not a part of classical economics textbooks. After Kahneman and Tversky’s discoveries, it took a lot of time for at least some economists to take up their ideas and try to incorporate them into economic theory.

One of the pioneers in this was Richard Thaler. He applied their work mostly into finance and contributed a lot in the development of the field. Thanks to him, the term “nudging” is now used to denote the use of behavioural economics to change choice structures and thus people’s behaviour (reading suggestion: Nudge by Thaler and Sunstein).

Behavioural economics thus brings psychology into economics and serves to create improved economic models, which incorporate the ways in which people really decide. It is a fast growing field that has wide ranging applications – from the marketing and public policy to understanding people’s financial decisions. Considering that it is still in the nascent stage, there is still a lot more work to be done. So let’s dig deeper into this fascinating field… for who knows, the next big breakthrough may come from one of us!

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Welcome to the B.BIAS blog

Wouldn’t economics make a lot more sense if it were based on how people actually behave, instead of how they should behave?
-Dan Ariely

We think it would!

That is why we created B.BIAS – Bocconi Behavioural Insights Association of Students.

This is the space where our members can share their ideas beyond our university classrooms!