In an economy in which healthcare is considered a public good, the costs of ‘risky behaviours’ – such as smoking and drinking – would seemingly outweigh the private benefits; the perceived benefits include pleasure and satisfaction, enhanced self-image, stress control and avoidance of withdrawal. The private costs to be weighed against those include money spent, damage to health, and addiction. Defined this way, the perceived benefits evidently outweigh the perceived costs.
According to ‘rational choice theory’ (the basis for predicting much of the consumer behaviour), this paradox shouldn’t exist. So, for example, if we are all rational, then why do some individuals choose to smoke and drink, when it does more harm than good?
The answer lies within the individual and gives understanding to a seemingly irrational thought process.
We are unique. It becomes a lot harder to predict ‘rational human behaviour’ when we all hold different values in different esteem. Whilst schools of psychology, sociology and economics can make general assumptions, they will only ever be that.
A person may truly be unaware of the negative effects certain actions have on their health through lack of education – but perhaps it is sheer naivety.
Many studies over the years have managed to associate higher levels of impulsivity to smokers. These studies conclude that smokers are more likely to dismiss the future/long term effects of their actions (they’re more myopic). Research such as that by Bickel & Marsh (2001) and Rachelin et al. (2000) found people with these characteristics were also more likely to accept an immediate cash reward over a larger, but delayed cash reward. This myopic behaviour has also been linked with levels of education and younger participants (Chaloupka, 1991).
Being an additive good, there is negligible effect between the full price – monetary price, health effects and legal sanction – associated with consumption. This implies higher tax and therefore, price, has a limited beneficial impact on our welfare.
Does a smoker disregard the 10 years taken from their expectancy and only consider the present-day benefits? Perhaps helping them to realise these long term effects would reduce the trade off of their own health. The answers to these questions lie in further qualitative research, and can only result in more effective future services.
Unfortunately, the amount we value our health is hard to quantify and some of us value time (perhaps the most valuable commodity) more than others.
Written by Tim Munns, ICE Creates Ltd (0845 5193 423 / firstname.lastname@example.org)
Bickel, W.K., & Marsh, L.A. (2001) “Toward a behavioral economic understanding of drug dependence: Delay discounting processes”. Addiction, 96, 73–86.
Rachelin, H., Brown, J. Et al. (2000) “Discounting in judgements of delay and probability” Journal of Behavioral Decision Making, 13: 145-159.