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Home > Focus > Dan Ariely and Behavioral Economics

Dan Ariely and Behavioral Economics

di Jonathan Hankins [1], 3 Giugno 2010

The phrase 'responsibility is down to politics and not ethics' has more than once been heard during discussions here at the Foundation. If this holds true then it might be interesting to take a look at Dan Ariely's work [2] on behavioral economics.

Ariely is currently Professor of Behavioral Economics at Duke University and has become well known thanks to his book entitled Predictably Irrational. The book carries the subtitle 'The hidden forces that shape our decisions', and it is in this title that we find a key to my interest from the point of view of the Bassetti Foundation's work.

Predictably Irrational by Dan Ariely The book is an almost journal like description of a series of social science experiments that - although varied - all try to look at the decision making process. Examples include investigating dishonesty, pricing relativity and the fallacy of supply and demand in economic analysis. The arguments are very much presented in lay terms, this is not by any means a scientific book, but the results described in some of the experiments seem extremely relevant for the work of the foundation.
One chapter is entitled 'The Power of Price', and it addresses the perception of the effectiveness of medical treatment in relation to its cost.
You would not be surprised to discover that the more expensive the treatment the greater the beneficial effects for the patient. What may come as news is that just telling a patient that their treatment is very expensive improves the effectiveness of that treatment.
This effect obviously has repercussions on the costs of healthcare. As noted in previoue postings the Hastings Center health care cost monitor [3] is looking at health reform and cost on a technical level, but the variable of perceived expense in treatment is something that might be very difficult to put into an economic model.

He also raises the issue of placebo treatment effectiveness. In some cases placebo treatment is found to be as effective as surgery in pain relief, but obviously at a fraction of the cost. A policy of performing half of the operations and giving half of the patients a placebo treatment would save a lot of money, money that could be invested in research aimed at treating other problems, but a political decision of that type might I imagine cause some debate!

He also opens a door of debate regarding clinical trials. He argues that more clinical trials should be conducted in order to really understand how effective certain treatments are. His perspective is very personal as he was subjected to some painful burns treatment experiments while in hospital after an accident involving the explosion of a phosphorous flare. He argues from the point of view of someone who has personally suffered medical testing without having been completely informed about the technical state of advancement at the time, raising questions of informed consent and rights but also of the necessity to test new approaches.

Another chapter addresses the problems of procrastination and self control. The problem is raised of trying to make people take actions today in order to secure a financially stable future. Taking responsibility today on a personal basis helps society in all sorts of ways, but could a politics be introduced that in some way lead people into saving without it being seen as coercion? The author argues that there are ways (some of which are practiced today) to help people save for the future, involving for example an increment in the percentage saved of future pay gains.

The crux of many of Ariely's arguments seems to be in the way choices are presented. In this way I would argue that as stated above responsibility comes from politics, as the design of the choice has serious ethical and social implications.

Ariely has also worked on the design of the default choice. He argues that in any given situation a large percentage of the population will choose a course of non action, and the result will be the default as previously set into the process will become their registered decision.

One example he gives in a radio interview [4] is of medical doctors deciding which tests to send their patients for. When the doctor brings up the booking system on the computer each decision carries with it a cost, but also a norm, for example it could be the case that a patient is sent for 6 tests because the default setting is that somebody who needs test 1 should have tests 2 to 6 as well. This may be well and good, but he argues that tests may be carried out that are not strictly necessary just because the doctor did not cancel them from the default list, and this costs money.

Another example might be of organ donorship. In a country where an individual has to collect a card from their doctor's surgery in order to become a donor the percentage of card carrying donors will be low. In the case of a country that imposes the law that all citizens are organ donors unless they opt out of the scheme, the percentage of non opted out donors will be much higher.

In one of my previous posts [5] I discussed problems with Facebook and privacy, problems that are also directly related to choices made in the design of their default security settings that seem to lead users into making more information public than they might like, settings that have recently been reviewed and some say improved, although this matter is currently under debate [6] all over the net.

You can get a good idea of his approach in this 20 minute video, including his argument about the addition of a useless option in order to affect choices. Both his presentations and book are full of irony and humour and easy to read and understand.

Predictably Irrational is published by Harper Collins Publishers in London and costs £8.99.
The Italian translation entitled Prevedibilmente Irrazionale is published by Rizzoli and costs €21.00


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Link citati nell'articolo:

  1. 1] /schedabiografica/Jonathan Hankins
  2. 2] http://danariely.com/
  3. 3] http://healthcarecostmonitor.thehastingscenter.org/
  4. 4] http://marketplace.publicradio.org/display/web/2010/03/08/pm-defaults-q/
  5. 5] /it/rassegna/2010/05/google_and_facebook_back_in_th.html
  6. 6] http://www.slate.com/id/2255118
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