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Why don’t people living in stressful environments migrate elsewhere? Behavioral Economics Blog

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Friends of the Behavioral Economics Blog, this week we present the paper “Why do people stay put in environmentally stressful regions? Cognitive bias and heuristics in migration decision-making”, by Czaika, M. and Reinprecht, C. (2022), in which authors talk about the cognitive biases and heuristics that may underlie migration-related decision making by people living in stressful environments.

Human migration and mobility are massive phenomena. Currently, more than 270 million people live outside their country of birth, more than 700 million have moved between regions within the same country, and 1.2 billion people cross borders for short trips each year.

Until they make the decision to move, these people are part of a latent population of potential migrants. 

In addition, about 500 million people think that they may have to move, due to environmental problems, in the next 5 years. 

Most people exposed to slow or rapidly deteriorating environmental conditions do not migrate despite the availability of exit options. This is because there are drivers of immobility that limit migration and motivate people to wait and stay. 

There are economic, political, social, cultural, demographic, ecological and environmental factors that affect decision making of this type. 

The fundamental ones are usually economic, such as unemployment, wage disparities, or lack of economic opportunities. 

In addition to economic factors, socio-political factors such as wars and civil strife, instability, insecurity, military recruitment, human rights abuses, lack of democratic rights… are key structural drivers of migration. 

On the other hand, social ties with family and community are a very important retention factor. In a 2020 survey of citizens of Ethiopia, India, Peru and Vietnam, it was found that the majority of people who wanted to migrate did not do so because they did not want to leave their family living there. 

The role of climate change is gaining momentum in migratory aspects and is worth mentioning, because it implies that both mobility and immobility may be the behavioral outcome of slow or rapid onset environmental stressors. However, economic factors remain the most relevant. 

We may wonder why many more people do not migrate to take advantage of opportunities elsewhere, or why more people living in an environmentally stressful situation do not decide to escape. 

The combination and interaction of economic, political, social, cultural and demographic factors shape the effect of environmental stressors on migration. They often act simultaneously, which makes it more difficult to analyze the reasons for not migrating. 

What experts mention is that, in general, migration decision-making can be considered a two-step process: first, people decide whether they want to migrate, then where they want to relocate. 

The first step consists of developing the intention, rather than simply a vague desire; the second step involves considering migration or behavioral options and deciding whether to migrate or stay. 

To migrate, individuals need economic, social, emotional and cognitive resources. If they aspire to a better life but cannot execute migration, people may feel trapped, frustrated, and experience cognitive dissonance. 

Behavioral sciences propose three main cognitive biases: first, the status quo bias, that is, people have a strong preference for the context and situation in which they currently live, which can be reinforced by the endowment effect, which would be the second bias. According to this, people value what they have more than what they could have, even if both are of equal value. And finally, regret avoidance, i.e., people prefer to avoid anticipated negative outcomes resulting from action rather than inaction. 

Authors recommend that people with migration aspirations decide on their long-term relocation after exploratory visits that reduce uncertainty about the new place of residence. 

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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What do people think about the utilization of nudges to improve their behavior to protect the environment? Behavioral Economics Club

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Friends of the Behavioral Economics Club, this week we present the paper “Survey results on using nudges for choice of green-energy supplier” by Milaszewicz, D. (2022), in which the author analyzes the results of a big survey made to Polish population about the people’s opinion on the utilization of nudges to improve their environmental behavior. 

On more than one occasion we have selected several articles on this blog dedicated to caring for the environment, due to its importance.

Global warming, for example, is a matter of concern for the entire world. It is also true for electricity consumers in general, as reflected in the existing consensus on the urgent need for radical changes in energy consumption patterns, and the polluting emissions that arise, mainly, from excessive dependence on renewable energy sources. fossil energies.

One of these agreements is the Paris Agreement, which reaches collective action to reduce the risks and impacts of climate change, and each participating country has committed to submit additional plans internally to reduce greenhouse gas emissions (from hereafter GGE).

In Poland, the context of this article, a low-carbon energy transformation will be required, with the end user playing an active role, thus marking the importance of households in this process.

According to some experts, a key strategy for reducing GG emissions is a massive shift in energy demand from carbon to green, renewable, and carbon-free energy sources, such as wind, solar, or thermal power.

Political interventions to promote these changes in the domestic context are mainly based on providing information, financial incentives, legal orders and prohibitions. However, they are often ineffective in motivating people to adopt sustainable behavior on a voluntary basis.

On the contrary, many empirical studies show that using behavioral economics on human judgment and decision making contributes to improving information, financial and legal instruments, and allows the development of new behavioral intervention tools and strategies, which that leads to the desired sustainable and lasting changes.

One of the behavioral approaches to increasing the frequency of sustainable behavior is based on the concept of “nudges”. It starts from the idea that humans have a limited rationality and we need certain impulses to change our behavior and thus achieve the common good.

The object of study of this article is the degree of acceptance of these measures, of these “nudges”, by the Polish population. In other words, the author intends to present the “nudges” as one of the change strategies to achieve pro-environmental behavior, and to analyze the factors selected to determine the acceptance of these practices by society.

To do this, she conducted a series of interviews in October 2020, a critical moment when practically the entire world was affected by the Covid pandemic. Approximately 100,000 consumers participated, ranging in age from 15 to 65.

Most of the people who participated in the study were female (52.4%), older than 55 years (32%), with a medium educational level (41%), residents of large cities (42.4%) and mostly employed workers (47.3%).

Most of Polish (81%) see the problem of climate change and its consequences as the biggest challenge facing humanity in the 21st century, and express growing support for green energy.

More than half of Polish people (58%) believe that their country should rely more on renewable energy sources to tackle the climate crisis, and 64% are in favor of the government introducing tougher measures to force the change in citizen’s behavior; within these changes, “nudges” are included.

However, there is a lack of trust in the government shown by almost half of the citizens in the study and this may be a factor that prevents the full acceptance of the tools carried by the authorities, in such a way that the desired changes were delayed. .

The author decides to highlight the idea that the Polish population is open and motivated to change their behavior in order to overcome the environmental crisis we are suffering. She also mentions that it would be very useful for those responsible for formulating energy policies to take into account each of the results of this macro-survey (more detailed in the original article), to be used in the generation of energy strategies.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

 

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Narcissistic personality and tolerance to financial risk: arrogance makes us lose money? Behavioral Economics Club

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Friends of the Behavioral Economics Club, this week we present the paper “Narcissistic Personality and Financial Risk Tolerance: an exploratory study in Turkey”, by Sen, S. (2022), where the author carries out a study with universitary population of Turkey to study whether narcissistic traits of personality are related to a greater tendency to assume financial risks. 

There is an assumption in traditional economics, which is: the individual always behaves rationally and his purpose is to maximize his benefits. 

However, if behavioral economics teaches us anything, it is that the individual has limited rationality and, as a human being, is vulnerable to cognitive and emotional biases that influence his or her decisions.

This article focuses on the narcissism bias and how it can shape an individual’s decision making.

Specifically, it focuses on the relationship between narcissism and financial risk tolerance. The research question is whether there is such a relationship between both and, if so, how it works.

The author raises this question because, according to other experts, narcissistic individuals are more inclined towards overconfidence and more risk taking than non-narcissistic individuals.

But what do we mean by narcissism? Inspired by the legend of the Narcissus story, it was Havelock who brought the concept of narcissism to the psychological literature in 1898. Later, Freud described some signs of narcissism, such as self-admiration or the need for personal growth.

There are authors who describe narcissism as a social tendency, others as a disorder, or even as a psychological structure that all people can have, to a certain extent, in their personality.

Furthermore, narcissism can be pathological or normal. 

If the individual is pathologically narcissistic, it is difficult for him to recover from bad moments. Such individuals become problematic when they encounter disappointments and threats to their positive image. 

On the other hand, normal narcissism helps people make progress with their goals and cope with disappointments.

Risk, on the other hand, is the possibility of failure, loss or obtaining no profit. In finance, risk is defined as the positive or negative difference from actual expected results.

We also need to clarify what we mean when we say “risk tolerance”. It is defined as the maximum amount of uncertainty that an individual accepts when making financial decisions.

From a behavioral economics perspective, the level of risk an individual takes can change based on cognitive, emotional, and demographic factors.

Socioeconomic conditions also influence, especially for financial risk tolerance. For example, there are studies that suggest that women tend to be more risk tolerant than men, and that single people tend to take more risks than married people, adults more than young people, and those with higher incomes more than those who have small salaries.

To study the relationship between narcissism and financial risk tolerance, if it exists, the author gathered a group of university students from Turkey (the context where the study takes place) and gave them a series of questionnaires.

According to the results, men would be more narcissistic than women. Furthermore, the analysis does not show a significant and important relationship between narcissism and taking financial risks. However, it is necessary to mention that in this work, narcissism and taking financial risks had a statistically positive relationship.

In other words, if a person’s tendency to narcissism increases, their tolerance for financial risk also increases, although the relationship between the two concepts is not particularly significant.

To conclude, the author mentions that this may help provide a framework to measure the link between narcissism and economic risk, as well as highlighting the bias of narcissism in the Turkish context.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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Pathological gambling and the Native American population: a brief approach from behavioral economics. Behavioral Economics Club

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Friends of the Behavioral Economics Club, this week we present the paper “Differential Probability Discounting Rates of Gamblers in an American Indian Population” by Schneider, T. D.; Gunville, J. A.; Papa, V. B.; Brucks, M. G.; Daley, C. M.; Martin, L. E. and Jarmolowicz, D. P. (2022), in which authors investigate the differential probability discounting rates of pathological gamblers who are part of the native-american population of the United States.

Pathological gambling is a social problem that has always been present, but it seems that it is becoming more and more serious, due to casinos and bookmakers.

In the United States more than 80% of adults participate in some form of gambling each year. It is a pattern that seems particularly widespread among the native Indian population. For example, in 2021, 77% of white Americans participated in gambling, while the figure reached 80.1% for the Native American population.

These differences become even more notable when we consider those who gamble frequently and/or have gambling addiction problems. Specifically, 9.3% of the white American population is within this group, with 1.8% being the percentage of addicts; regarding the Indian population, 12.6% would gamble frequently and 10.5% meet the diagnostic criteria for pathological gambling.

One of the reasons for the risk of developing a pathological gambling addiction is that many of them live near casinos. For example, there are approximately 540 tribes of native Indians, and more than 240 offer gambling activities, reaching the number of more than 500 casinos.

In a study on Native American teenagers in seventh through twelfth grade, approximately 75% had participated in some kind of gambling that year, a higher percentage than the national average (45-55%).

It is true that there are significant economic benefits when they allow casinos on their land, but it also carries the risk of unintended problems for this population.

Gambling often involves wagering a small amount of money for a chance to win a larger sum of cash. In behavioral economics, these types of tradeoffs are compared through probability discounting tasks. In these tasks, the subjects have to choose between small but guaranteed and safe sums of money, and larger but uncertain sums of money. For example, a subject can choose between receiving $50 or a 95% chance of receiving $100.

In these games, the probability discount rate would appear through a series of mathematical procedures. The lower the value of this rate, the greater the willingness of players to take risks; the opposite occurs when there is an aversion to risk. In other words, these rates would be a numerical way of quantitatively representing the players most prone to risk behaviors.

Some experts are studying the neurobiological processes that drive pathological gambling. One approach, which is further explained in the original article, advocates using MRI to look at changes in blood oxygenation.

In this study, authors combine this last idea with probability discounting tasks in the Native American population, to try to better understand the risk of developing pathological gambling that this population faces.

12 people who played regularly and 12 people who did not, participated as a control group.

They underwent probability discounting tasks while the MRI was performed.

It was shown how the probability discount rates were indeed lower in people addicted to gambling in relation to people in the control group.

The findings suggest that probability discount rates may be a behavioral process underpinning risk-taking seen in problem gambling.

On the other hand, no major neurobiological differences were observed. Authors point out that the size of the sample was small and it might be necessary to carry out an experiment with more groups to delve into the neurobiological differences between the two.

Authors would also suggest studying auditory stimuli to know their impact on neural activity during decision making in gaming environments.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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Can we do it better next time? Covid-19 through a heuristics lens. Behavioral Economics Club

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Friends of the Behavioral Economics Club, this week we present the paper “Can We Do Better Next Time? Italians’ response to the Covid-19 emergency through a Heuristics and Biases Lens” by Misuraca, R.; Teuscher, U.; Scaffidi Abbate, C.; Ceresia, F.; Roccella, M.; Parisi, L.; Vetri, L. and Micheli, S. (2021), in which authors talk about the different cognitive biases and heuristics that could affect Italians during the worst waves of Covid-19 in 2020 and 2021. 

In January 2020, the Italian media informed the country of the spread of a mysterious and dangerous virus that originated in China. Within weeks of this declaration, the disease spread outside of China, causing thousands of deaths.

Immediately after this was known, the response from politicians and experts was not exactly as expected: everywhere it was announced that Covid-19 was no more dangerous than a common seasonal flu, there was nothing to worry about.

The first months of the pandemic went like this, the information provided to citizens about the real danger of the disease and the level of control over the spread of the infection remained unclear and sometimes contradictory.

In addition, recommendations on the safety measures to be taken to prevent infection (such as washing hands, wearing masks, confinement or social distancing) were recommended and not recommended several times. For example, sometimes it was considered very important to wear a mask, practically mandatory, but other times it was believed to be useless.

This lack of clarity caused a high degree of uncertainty among the Italian population (which is the focus of the authors and this article), as well as a very important lack of trust towards the main sources of information. People simply did not know who or what to believe.

Research from behavioral economics to understand decision making has shown that to deal with uncertainty, individuals adopt cognitive strategies, or heuristics, in order to simplify the environment. Heuristics would therefore be mental shortcuts used by humans to make decisions more quickly when the information is complex or incomplete. Sometimes this produces good results. Other times, it leads to systematic errors, called cognitive biases.

What the authors intend in this article is to examine the main heuristics and cognitive biases that could explain some of the most frequent behaviors of Italians during the worst moments of the pandemic that also were problematic from the point of view of public health, such as going to crowded nightclubs and bars, refusing to wear a mask and, in general, respecting the necessary security measures to control the spread of the infection. Finally, they offer some solutions that they consider appropriate.

According to the availability heuristic, when the media and politicians announced the risk of a deadly disease spreading, Italians reacted with an erroneous underestimation of the danger. People today know that the objective of journalists is not only to provide information, but to win the largest number of readers and viewers, which is often achieved by playing on the emotions of the public. In other words, Italians are used to the media sensationalizing events and therefore do not trust them. The same happens with politicians, since the population tends to consider that they are guided by their personal interests.

As a result, citizens underestimated and even ignored the political recommendations on the containment of Covid-19.

Another relevant idea is the confirmation bias, which is the general tendency to attribute greater importance to information that confirms our hypotheses, instead of contradicting them. During the Covid-19 outbreak, people might have mistakenly focused their attention on information that confirmed what they already believed (that the disease was flu-like, that journalists spread panic and anxiety out of professional interest…), instead of considering the new evidence that supported different conclusions.

Related to this confirmation bias is the ostrich effect, which refers to the tendency to ignore negative information by “burying one’s head in the sand” (although it has been confirmed that ostriches don’t do this, actually). That is, there would be a natural predisposition to avoid unpleasant situations and psychological discomfort, so that instead of facing the anxiety that accompanies all this, we prefer to ignore the problems. An example would be the Covid-19 deniers.

Heuristics and biases explain, based on what has been seen and previous literature, why many Italians acted as they did.

Given the spread of the virus and the growing death toll that continues two years after the start of the pandemic, it is crucial to help people think more rationally.

A first public health intervention to help people behave more logically is to teach them the particular way the human mind works, showing with practical examples how people’s thinking and behavior deviate from rationality. Increasing people’s awareness of the fact that their mind plays tricks on them in many ways is already a big step towards better decision making.

On the other hand, use could be made of the so-called “nudges”, the effectiveness of which has been demonstrated in previous literature. For example, it has been seen that in self-service cafeterias, if you change the position of fruits and vegetables so that they can be reached more easily, doing the opposite with unhealthy foods, it makes customers buy more of the first ones. Applying it to Covid, it would be a useful strategy to place masks and hand sanitizer in accessible public areas.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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Which cognitive and human factors influence the jury’s decision-making process of a trial? Behavioral Economics Club

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Friends of the Behavioral Economics Club, this week we present the paper “Cognitive and human factors in legal layperson decision making: sources of bias in juror decision making”, by Curley, L. J.; Munro, J. and Dror, I. E. (2022), in which authors revise previous literature about the biases that influence the jury of a trial when they have to decide whether somebody is guilty or not. 

Jury members are lay people (that is, without knowledge of the law or relationship with it), who must listen to the evidence of the different cases to evaluate them and reach a verdict impartially and without prejudice.

This is so because defendants have the right of having a fair trial and any biased influence can undermine this right and the jury’s decision making.

Despite this, there is a great variety of biases that influence the members of the jury when it comes to reaching a verdict, understanding bias as a factor that generates a preference towards a certain result.

It is important to study the biases that influence the jury because if they make incorrect decisions they can lead to injustice. It would not be the first time that several jurors have acknowledged making decisions before hearing all the evidence, thus highlighting that bias can influence jury judgments.

Previous research has already discussed different factors that can influence the appearance of biases, for example, beliefs and attitudes prior to the trial or interpretations of the evidence that are already biased by expert witnesses.

One of the reasons why having a jury in a trial is recommended by some people, is because it is believed that in this way individual biases are counteracted. However, for this to happen, certain conditions must be met.

With a practical example it is much clearer: if half of the people on the jury believe that black people are more likely to commit crimes, the other half should believe that white people are more likely to commit crimes. With this we deduce that it is not so easy to produce that balance.

The objective of this article was, therefore, to evaluate the appearance of biases at different stages of the trial: before, during and after the presentation of evidence.

Some of the biases that can be found in the early stages of the trial are the propensity to conviction, an overconfidence in the system, cynicism towards the defense, a need for social justice, racial prejudice or the belief of an innate tendency to criminality.

There is also partiality, which can enter the courtroom because of prior publicity about the case. A few years ago, the media provided biased information only in very specific cases or when they were about famous people. However, with the advent of today’s technological advances, jurors may receive biased information from the vast majority of cases and, moreover, from many Internet sources, which makes it easier for this biased information to influence their judgment and their opinion.

On the other hand, “cognitive bias” appears, which is a hyperonym that can be used to describe the subjective perceptions of people that can influence the decisions they make and how they interact with the world. This occurs because the human being has a limited cognitive capacity and therefore seeks efficiency when making decisions, and on the other hand, because of personal experiences.

Previous research has also shown that the interaction between cognitive bias and characteristics of the defendant and victim can impact jury decision making. For example, ethnic minorities are more likely to receive guilty verdicts, due to how the media associates them with crime.

Authors propose to improve the testimony of expert witnesses with different strategies, in order to mitigate the effects of bias. For example, provide additional training to help experts communicate their testimony in a logical way that leaves no room for doubt, or hire independent experts who are not associated with either side of the process.

Another recommendation is for a team of psychologists to educate jurors and legal professionals about the impacts of bias and the contextual information that is irrelevant for their tasks in trials. For the members of the jury, authors propose a short video that could be shown to them before the trial.

Authors consider that, due to the importance of the consequences that can occur after a wrong decision by jurors, more research should be done on how they can protect themselves from the influence of bias.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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Can the compromise of grown-ups with sports be improved? Behavioral Economics Club

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Friends of the Behavioral Economics Club, this week we present “Adaptive goals and reinforcement timing to increase physical activity in adults: a factorial randomized trial”, by Adams, M. A.; Todd, M.; Angadi, S. S.; Hurley, J. C.; Stecher, C.; Berardi, V.; Phillips, C. B.; McEntee, M. L.; Hovell, M. F. and Hooker, S. P. (2022), in which authors carry out a study to know whether economic incentives and an adaptative approach would help inactive adults to compromise with sports. 

Physical activity is a very powerful habit to reduce the risk of chronic diseases and to improve overall health.

Despite advances in technology, which had made possible that almost everyone has a wearable activity monitor (smart watches or smartphones), and the increasing awareness of the many benefits of regular physical activity, it seems that people have not substantially improved their sports habits in the last ten years.

A meta-analysis showed that, on average, adults’ physical activity has increased by just 2 minutes a day, which has no significant effect on their health or routine. And reducing disease risk requires powerful attacks.

The adaptative approach is a relatively new one, in which goals increase, decrease, or remain the same depending on the individual’s experiences while trying to achieve them.

In general, the used methods are based on static objectives. For example, a smartphone app will tell you: “today you must run for 30 minutes”, and the next day: “today you must run 40 minutes”, and so on, adding ten minutes to the daily goals.

However, these objectives do not adjust to the reality of people, and are insensitive to the specific changes each of them experience, which are rarely linear. This results in the abandonment of the behavior before it becomes a habit, which results in a lack of achievement of the final objective.

Meta-analyses also indicate that financial incentives were effective in increasing, and then maintaining, physical activity levels. Why? Well, because, as we have seen in previous articles, positive reinforcement is more effective when it is immediate.

The present study was carried out with the objective of observing if the use of an adaptive approach in combination with financial incentives would be effective in helping a group of inactive and sedentary adults to change their habits and improve their health through sport.

A total of 512 people from Arizona (United States) participated, between 2016 and 2018. The intervention lasted one year and they were followed up during the following one. Participants were between 18 and 60 years old and were adult men and women with sedentary or inactive lives.

The study required daily access to a smartphone. Three messages a day were sent to them, and they had to use an activity meter for a year. They were informed that they would receive a financial reward if they achieved their goals, up to a maximum of $365 if they met all of them.

Results showed that setting adaptive goals and combining them with immediate financial rewards increased participants’ physical activity and consequently improved their health.

Specifically, adaptive goals increased the probability of starting and maintaining these healthy habits by 50%. This method is very similar to having the services of a personal trainer, since it adapts to the personal evolution of each one of the individuals, making the progress much more powerful.

With the results obtained, it is deduced that using an adaptive approach it is possible to change or start a new activity, so that permanent behavioral changes are produced over time.

Authors also point out the need to delve into the effectiveness of financial incentives for other initiatives.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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Are financial incentives useful when it comes about motivating homeless people to take care of their health? Behavioral Economics Blog

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Friends of the Behavioral Economics Club, this week we present the paper “Using financial incentives to suppor servie engagement of adults experiencing homelessness and mental illness: A qualitative analysis of key stakeholder perspectives”, by Reid, N; Brown, R.; Kozloff, N.; Sosnowski, A. and Stergiopoulos, V. (2021), in which authors carry out a study to know how useful financial incentives are to facilitate the anchoring of homeless people to preventive healthcare services.

Adults who are homeless and/or mentally ill are at higher risk for other health problems, and for those they do have to get much worse, compared to the general population.

This includes a higher prevalence and severity of chronic diseases, alcohol and drug use disorders, neurocognitive problems or premature mortality, among others.

Therefore, engaging this population in health services is challenging, due to factors such as complex health needs, financial barriers, limited availability of personalized services, stigma, and discrimination.

The literature about interventions to improve health service engagement of homeless and mentally ill adults is limited.

Furthermore, considering that low levels of engagement are associated with poor outcomes, including increased severity of illness, lower quality of life, and higher rates of intensive care use, implementing strategies to improve engagement of this population in services remains a priority in health care and social service settings.

Financial incentives have been used successfully to influence health decisions in a variety of populations and health care settings.

It has been suggested that financial incentives may be particularly effective in facilitating the participation of underserved populations in emergency health services in the short term.

For homeless and mentally ill people, existing literature suggests that financial incentives can be used as a successful tool to improve these people’s attendance at psychotherapy services, or increase their rates of medication adherence, and even to help stop smoking or using other substances.

Financial incentives can effectively influence health-related decision-making by appealing to our general tendency, as humans, to focus on the present and immediate rewards.

However, when we talk about financial incentives, an ethical problem arises regarding the coercion of this method, and its potential impact on autonomous decision-making.

As the appropriateness of financial incentives is still debated, more evidence is needed to better understand how they work and in what contexts they are truly useful.

This study focuses precisely on this last point. Part of the Coordinated Access to Primary Health Care for the Homeless with Financial Incentives, CATCH-FI. It is an intervention that brings together multiple organizations and sectors to provide comprehensive support in the short and medium term to homeless people and people with mental illness.

To choose the subjects, they had to meet the following requirements: homelessness, or precarious housing; unmet health needs; need support, and be over 18 years of age. A total of 34 participants were recruited.

Semi-structured qualitative interviews lasting approximately 40 minutes were conducted. Authors aimed to explore the perspectives and experiences of these people regarding financial incentives and health service.

The results demonstrated that financial incentives can successfully facilitate service participation for some users. A set of users in this study described the prospect of earning money as an external motivating factor that encouraged continued contact with CATCH-FI providers.

This is consistent with principles of behavioral economics, which suggests that extrinsically motivated individuals, and those particularly biased toward immediate rewards, may be especially likely to respond positively to financial incentives.

The fact that it has a greater impact on some people than on others seems to be related to intrinsic motivation. That is, this is a key ingredient to initiate and maintain healthy behaviors.

The study’s findings also speak to the importance of receiving quality care, as many users of the service described how it helped them stay in touch with him.

Authors point out, for future research, the importance of studying how financial incentives can be used to improve precisely these last two aspects: intrinsic motivation or quality of care.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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How do important events affect a couple’s life and their compromise with the environment? Behavioral Economics Blog

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Friends of the Behavioral Economics Blog, this week we present the paper “Romance and the ozone layer: panel evidence on green behavior in couples”, by Köbrich León, A. and Schobin, J. (2022), in which authors make an analysis with couples to know how the important events in their lives have affected their compromise with the environment as a couple.

It is a reality that romantic relationships are usually the center of people’s social life and, therefore, influence many aspects of our personality.

For example, previous studies on conjugal relationships identify similarities in aspects as disparate as the perception of risks, participation in the stock market or tobacco consumption. Some, even, have studied pro-environmental behavior.

However, few talk about the synchronization that happens between the members of the couple and if it is marked by important life events.

As interested in behavioral economics, we are also interested in anything that influences people’s decision-making and behavior shaping, so we are going to delve into this topic and see what authors have to tell us about it.

They mention the investment model of attachment to society. This suggests that the quality of relationships is an economic good that the couple co-produces, by aligning their behaviors in the life cycle, by socializing their preferences through daily interaction.

In addition, it predicts that the commitment that the couple has with society is the product of a reduction in the heterogeneity of preferences, because people who are highly committed to each other give up personal preferences to adapt to the interests of others.

The literature on this model shows that the strength of the commitment depends on the stage of the couple’s relationship. That is, pro-environmental behaviors will change over the course of life. Therefore, authors are on the right track when they decide to study how important events in couples’ lives affect their behavior, such as marriage or the birth of children.

Many of the pro-environmental behaviors end up becoming habits, and this is an important fact to keep in mind because important life events review habits and can establish new practices that replace them.

To explore all this, authors conducted surveys in two waves of a total of 6,349 couples, that is, 12,698 individuals.

They considered major life events (changes in marital status, pregnancy and childbirth, acquisition of real estate…) as the main variables. Beliefs about the need for action against climate change were also taken into account, in addition to socioeconomic factors, such as age, education and income.

Obtained results provide important information. For example, getting married was not found to exert a statistically significant influence on the couple’s alignment process, but the pro-environmental behavior scale scores of couples who had divorced became more similar than the ones of those who remained together.

An interesting fact is that couples who divorced but did not change their address and continued sharing their home, became more similar than couples who remained together, even if they were not married.

Regarding pregnancies and births, it shows that differences in pro-environmental behavior significantly decreased over time in couples who did not have children. For couples who did have, the opposite occurred after the baby was born.

These findings largely mirror the results of family psychology studies of changes in relationship quality and attachment during the transition to parenthood. Current literature identifies the birth of the first child as a particularly dynamic phase in the development of the couple’s division of labor and in the allocation of economic resources.

This literature suggests that most couples invest in relationship quality and attachment before delivery to buffer the decline in quality that will follow. In other words, the period of preparation for the first child is characterized by a very strong commitment to the couple. This may explain the high concordance between the pro-environmental behaviors of prenatal couples. After childbirth, divergences appear to adapt to the demands of rearing.

In short, major life events drive alignment in couples’ pro-environmental behavior, at least to some extent. The finding is consistent with previous literature, however, authors point out the need to continue investigating the subject.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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How do cognitive biases affect professionals in administration, finance, justice and medicine? Behavioral Economics Blog

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Friends of the Behavioral Economics Blog, this week we present the paper “The impact of cognitive biases on professionals’ decision-making: a review of four occupational areas” de Berthet, V. (2022), in which the author makes a revision of previous literature to know how cognitive biases affect professionals that have to make complicate decisions in different areas.

We have already seen in other articles how we can make mistakes when making decisions under the influence of cognitive biases, which can make us choose what is least beneficial to us.

For example, people tend to overestimate the accuracy of their judgments (overconfidence bias), or to perceive events as more predictable once they have already occurred (hindsight bias).

It’s not strange, then, that cognitive biases have attracted the attention of experts. While early research on cognitive biases was conducted with lay participants to study the general decision-making process, there seems to have been a great deal of interest in how biases spread to professional decision-making in areas such as management or administration, finance, medicine and justice.

For example, there is the framing effect, which tells us that when making risky decisions, people prefer safe gains over riskier ones. Therefore, framing a problem in terms of gains versus losses could have a significant impact on decision making.

In most trials, for example, plaintiffs must choose between a certain gain and a larger potential gain, while defendants choose between a certain loss and a larger potential loss. When considering settlement, judges who evaluate the case from the plaintiff’s perspective are more likely to recommend a settlement than those who evaluate the case from the defendant’s perspective.

For all this, the author carries out a review of the existing literature, to verify the approximate impact of cognitive biases in professional decision-making process in the previously mentioned areas. In addition, it establishes three main objectives.

The first is to decide if it is true that cognitive biases arise in professional decisions; the second, to evaluate the level of evidence shown in the analyzed studies; finally, identify if there are gaps in the research.

The author mentions some biases that should be explained, since they appear in most of the studies used for the analysis.

The first of these would be the anchoring bias, which would be the tendency to adjust our judgments to the first information obtained.

Next, we have the availability bias, which is a person’s tendency to assess the probability of events by the ease with which similar events that have already occurred come to mind.

Confirmation bias is the tendency to seek out, interpret, favor, and remember information that confirms and supports one’s personal beliefs.

Hindsight bias is the propensity to perceive events as more predictable once they have occurred.

The overconfidence bias is a common tendency for people to overestimate their own abilities.

Finally, we mention the framing susceptibility bias, which is the tendency for people to react differently to a decision depending on whether it is presented as a loss or a gain.

The analysis showed significant answers to the questions that the authors proposed at the beginning.

First, the reviewed literature shows that, in general, professionals in the four proposed areas (management, medicine, finance and justice) are vulnerable to cognitive biases.

In management, there is evidence that framing effects and overconfidence among CEOs impact decision-making.

In finance, there is strong evidence that overconfidence and the disposition effect (a consequence of loss aversion) impact the decision making of individual investors.

Regarding medical decision-making, the existence of omission bias, relative risk bias and availability bias is guaranteed, associating overconfidence, anchoring bias and availability bias with diagnostic errors.

Finally, anchoring biases, hindsight bias and confirmation bias, would be present in judicial decision-making.

The first step in controlling its influence is for practitioners to consider concrete and practical ways to reduce its impact.

Addressing limits, such as the need to consider individual differences to study bias, is something that, according to the authors, is necessary for further research on the topic.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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