Download r + d

Behavioral Economics and Health Promotion
Arnošt Klesla
Faculty of Economics, University of Economics, Prague
Abstract:
The health conditions of 60+ age group are fundamental for healthy aging policies’
successful implementation, whilst the most important single factor lies in healthy lifestyle of
the aforementioned group. Health promotion is being defined as the rational application of
health lifestyle principles by any individual, in order to prevent illness. Health itself is a part
of human capital and provides time for its productive utilization. Everyone can support its
own health in two ways, according to Grossman’s health-demand theory. Actively supporting,
investing and accepting healthy lifestyle or consuming the health care in passivity. Spread of
the non-communicable diseases (NCD) demands acceptation of the healthy lifestyle. Keeping
of its rules prevents behavior with bounded rationality. Its analysis as well as the analysis of
the irrational choice provides behavioral economics. An effect of self – confidence, framing
and lack of self-control introduces efficient tools for state programs and other interventions.
They also represents shift from bio-medical to socio- economic concept of health promotion.
Key words: health promotion, lifestyle, behavioral economics, non- communicable diseases NCD, health promotion programs
JEL classification:
I 15, I 18, I 19
1
Europe and other continents in trouble
U.S. and other Western economies face major concerns in addition to global financial
crisis. Population in Europe and USA is aging rapidly. Liquidity problems are starting to
occur among various pension funds in these countries. The ratio of working pensioners is
decreasing. The share of population older than 64 year in 15 - 64 age groups will probably
grow from current 20 to 30 percent in 2020 and above 35 percent in 2030 in the Czech
Republic. There is an even worse current state in the Western European countries and Japan
(MPSV, 2011).
Figure 1 Population diversification by age in Japan, Germany and Czech Republic.
Source: MPSV ČR, 2011
Government usually reacts by the extension of retirement age and extension of the retirement
age limit. However, social and health care systems' face a new challenges. Sustainability of
this system depends on the problem of Healthy Ageing, except of other significant problems.
Health conditions in the age category 60 + are fundamental for success of this policy. Overall
health status of the 60 + generation in the Czech Republic is not satisfactory in this regard.
Only 132 000 (2.7%) pensioners (60 +) is still active as a full or half time workers.
Active work and health in 60+ age
Total amount of time available for productive activities is determined by health conditions in
the productive age (19 – 64). Health itself is being defined as a part of human capital. (Stock
of health capital) (Grossman, 1972). Poor health conditions constitute handicap for older
applicants on the Czech labor market. Good health in 60+ results from the successful
management of health factors (determinants) from childhood. The lifestyle is considered to be
the decisive factor in this regard. The standard health determination model set the 50 – 60
2
validity to the factor of lifestyle. The health care influences only 15 – 20 percent of
individual’s health with the similar influence as environment and genetically preconditions.
The lifestyle is being decisive for a good health.. It emphasizes giving up smoking and other
drugs, reduction of alcohol consumption, health nourishment and regular physical exercise.
Lifestyle of the majority of European population does not promote health (sedentary lifestyle,
smoking, alcohol and drugs addictions etc.) That leads to rapidly growing disease incidence 1
in correlation with age. The chronicle diseases as the outcome of unhealthy lifestyle in young
and middle age represents the majority of it.
Figure 2 Chronicle diseases incidence in age groups in the CR (2011)
Podíl osob s dlouhotrvajícími zdravotními problémy podle věku a pohlaví, 2011, v %
Zdroj: ČSÚ - VŠPS
Muži
42,7
Ženy
40,1
42,7
32,8
35,8
23,4
25,8
16,2
18,7
11,5
5,7
4,8
8,1
6,6
11,5
12,4
35-39 let
40-44 let
8,9
5,2
6,1
6,5
15-19 let
20-24 let
25-29 let
30-34 let
45-49 let
50-54 let
55-59 let
60-64 let
Zdroj: ČSÚ - VŠPS
Source: ČSÚ, 2012
The main instrument for change of lifestyle is the concept of Health Promotion. Health
promotion is the process of enabling people to increase control over, and to improve, their
health (Ottawa Charter 1986). The main objective of the concept of health promotion is to
improve the health by promoting desirable behavior, the healthy lifestyle. The bio-medical
approach followed by the psychosocial approach dominated the programs and interventions
practice in the recent years. The socio-economic concept is being pushed ahead during the
second decade of the 21st century. People tend to submit to economic conditions and
consumer culture. The principal-agent biases as well as emergence of new medicines and
treatments cause the false idea of individual health as the sole responsibility of medical
practitioners (Stieglitz, 1987). Modern medicine leads to health lifestyle underestimation,
supported by various systems of health insurance. People therefore tend to irresponsible
behavior towards their own health. This kind of behavior is often described as moral hazard in
areas of banking of insurance.
Economic interpretation of human behavior in terms of health promotion
3
The two basic approaches to individual health may be described as Investors and Consumers,
according to the concept of health capital and the demand for health (Grossman, 1972).
The Investor accepted healthy lifestyle. He prefers health and ability to work throughout the
life. He is efficient, does not spend time by diseases because he lives healthy and fully utilizes
prevention. He is active and healthy to the old age.
The Consumer focuses only on treatment, does not follow a healthy lifestyle and is not
efficient. He prefers the consumption of other goods. Spend time by treatment and suffers by
diseases in old age. Therefore soon loses the ability to work.
Figure 3 Variants demand for health in order of individual preferences
A – Investor
B – Consumer
r+
r+
Hi
Hi
Source: Grossman, 19721
The y axe represents capital cost values r, raised by age-increased depreciation of health. The
x axe represents health stocks Hi, constantly renewed by the Investor during its life or in the
higher age by the Consument. Different health demand curves show different economic
approach of both behavior models to individual behavior. Investor pays for the consumption
of healthy lifestyle for its whole life and prevents its natural decline. On the other hand, the
Consumer pays for other goods until the higher age. Not until he loses significant amount of
health, he invests to it..
Different shape of curves and differences in demand functions are caused by differences in
healthy lifestyle and keeping of its rule in accordance with health promotion concept.
Real development of illnesses and working inability in the Czech Republic.
1
The y-axis shows the value of the cost of capital r, plus the increasing age wear δi health. The x-axis shows the
supply of health Hi, the investor recovers continuously throughout life, and consumers to the elderly.
4
The statistical data proves the aforementioned hypothesis. Czech employees’ health statistics
Incapacity for Work (IfW) by age.
Figure 4 Communicable disease
30.0
24.2
25.0
20.0
10.6
10.0
5.0
0.0
dýchací
poranění
trávicí
močové
14.8
15.0
8.9
8.9 7.9
7.4 7.6 7.6
3.1
4.9 3.9 3.7
3.6 3.8 3.5
3.4
3.4
2.2 1.7 1.5 1.3 1.2 1.3 1.3 1.2 1.1
-24 -29 -34 -39 -44 -49 -54 -59 -64
Source: ÚZIS
Figure 5 Non-communicable diseases (NCD).
10.0
9.2
8.2
8.0
6.8
6.0
5.8
4.2
4.0
2.0
0.0
4.6
5.2
oběhové
5.9
2.5
0.4
0.4
0.5
0.7
0.9
1.3
0.2
0.2
0.2
0.3
0.5
0.8
pohybové
7.6
3.1
novotvary
1.3
diabetes,
š.žl
1.8
0.9
1.0
-24 -29 -34 -39 -44 -49 -54 -59 -64
Source: ÚZIS
The worst among NCD are musculoskeletal diseases MSD (measured by IfW)
Figure 6 Development MSD in years 2007 - 2010
Source: ÚZIS
5
Tendencies and consequences
Communicable diseases (respiratory) do not affect workers' health in older age. People have
learned to use prevention and behave like investors. Incidence of Non-communicable diseases
(musk. cardiac, cancer, diabetes) increases with age. NCDs disqualify older employees on the
labor market. Despite that, people invest just a little in this area. There is only a few investors
against NCD in the Czech Republic. The NCDs cannot be cured, consequences can only be
alleviated. That represents a substantial factor unrecognized by the public, except of the fatal
diseases such as cancer. Dramatically deterioration of the quality of life and raise of the living
expenditures in the group of patients suffering by diabetes mellitus represents fundamental
argument for keeping the healthy lifestyle.
Why people do not behave rationally in all cases of the health promotion? People prefer
health (Investor), but cannot preserve this preference in all situations (Consumer). Standard
economics cannot explain this discrepancy. According to Becker et al (1988) for example
smoking is rational choice because it offers best utility to the individual. This problem can be
explained by behavioral economics analysis It is based on the combination of neoclassical
economy and theory of preferences (Becker, 1993) with psychological approach to bounded
rationality as represented by behavioral economy (Kahneman et al 1991).
Bounded Rationality - cornerstone of behavioral economics
Bounded rationality leads people to wrong decisions - the more mistakes you made, the more
you got into the role of Consumer. The concept of Health Promotion does not offer
comprehensive solution. It is currently based on medical approach to people and customs
(bio-medical paradigm). Adult humans are neither children nor patients in the 21st century.
We do not want to hear again and again that we shall not smoke, shall not eat junk food, and
need to exercise regularly.
Economic rules of people's behavior (irrationality) need to be understood to design efficient
Health Promotion programs. In terms of behavioral economics, smoking is not a bad habit,
but the consumption of specific good with specific utility of the individual. The solution
cannot be found imposing of warning signs for instance on tobacco. The negative
interventions show only a minimal efficiency. Real solution lies in employment of behavioral
economic tools in the programs of health promotion and healthy lifestyle. For instance the so
called loss aversion effect can be used to solve the problem of smoking. Refers to people's
6
tendency to strongly prefer avoiding losses to acquiring gains. Smoker has to accept better
substitute such as an e-cigarette.
Behavioral economics - examples of solutions
Effect of self-confidence explains careless attitude of Czech population to their own health.
Especially young people are confident of the strength of their health. Underestimate the risk
factors, (smoking, alcohol, drugs) and do not pay attention to preventive medical
examinations. Health is considered „a gift from God“and in the case of illness relies on health
care. This effect explains the emergence of Consumers of health and is a major obstacle to the
adoption of healthy lifestyle.
Lack of responsibility for own health is explained by the Framing effect. Affects a significant
part of the Czech population. Healthcare promotion is too complicated process for many
people among Czech population. They prefer to pass the responsibility to the hands of
doctors. This creates a comfortable feeling of reassured health and safety. Many cannot see a
reason to promote their health in an active role as Investors.
Lack of self-control effect is the dominant cause for explosive growth of obesity in Europe
and the U.S. in recent years. Everyone wants to be slim, beautiful and healthy (and wealthy).
But when we see a cake after lunch, we change our preferences and resolution to maintain
body weight is lost. The cause is in the instability of preferences in time.
Conclusion
The authorities have to face NCD diseases in a more active way in the EU during the coming
years. The concept of Health Promotion can operate more efficiently if it employs economic
approaches, including behavioral economics.
7
References
BECKER, Gary, S., Human Capital: A Theoretical and Empirical Analysis with Special
Reference to Education, Third Edition, The University of Chicago Press, 1993, 390
s., ISBN: 0-226-04120-4
BECKER Gary, S., Kevin MURPHY. A Theory of Rational Addiction, Journal of Political
Economy 96, 1988, č.4, s.675-700 ISSN: 0022-3808.
http://research.chicagobooth.edu/economy/research/articles/41.pdf
ČSÚ, Zdravotní problémy populace v produktivním věku v ČR. Analýza ČSÚ [online]. 2012,
s. 9 [cit. 2012- 08-02].
http://www.czso.cz/csu/csu.nsf/informace/czam050412analyza12.doc
GROSSMAN, Michael. On the Concept of Health Capital and the Demand for Health.
Journal of Political Economy. 1972, roč. 80, č. 2, s. 223-. ISSN 0022-3808. DOI:
10.1086/259880. http://www.journals.uchicago. edu/doi/abs/10.1086/ 259880
KAHNEMAN, Daniel., Jack. KNETSCH, Richard. THALER , Anomalies : The Endowment
Effect, Loss Aversion, and Status Quo Bias, The Journal of Economic Perspectives,
Vol. 5, No. 1, 1991, s. 197
MPSV. Důchodová reforma: Otázky a odpovědi k vnějšímu připomínkovému řízení.
MINISTERSTVO PRÁCE A SOCIÁLNÍCH VĚCÍ. http://socialniporadce.
mpsv.cz/cs/ [online]. 2011. vyd. Praha, 2011 [cit. 2012-10-13].
http://socialniporadce.mpsv.cz/cs/
STIEGLITZ, Joseph E. Principal and agent. The New Palgrave: A Dictionary of Economics,
1987 v. 3, pp. 966-71.
ÚZIS, Ukončené případy pracovní neschopnosti pro nemoc a úraz. Praha: ÚZIS, 2011. ISSN
1210-8693 (0862-5611). http://www.uzis.cz/katalog/zdravotnickastatistika/ukoncene-pripady-pracovni-neschopnosti-pro-nemoc-uraz
8