Image for post
Image for post

Behavioural Economics and pandemics

Behavioural Economic insights are one of the only tools that can harness the intrinsic power of an epidemic and turn it on itself.

Covid-19 and human decision making

Stopping the Coronavirus is fundamentally a human decision making problem. If every single person in the world made the decision to increase their hygiene levels and self isolate properly there would not be much else we could do to combat the issue. At least until a vaccination is created.

Economists treat public health as a public good, and public good problems are notoriously tricky to solve. There is an intrinsic conflict within every individual between their personal needs and the greater societal needs. In this specific case, individuals personal interests (going outside, socialising with friends and, not stockpiling food) contrast with the greater social interests (staying inside, not socialising and, continuing to buy food at normal, stable, market levels).

Behavioural economics and epidemiology

As we all know, virus’s don’t spread linearly. One person may infect as many people as they come into contact with. Infection, soon becomes exponential. In epidemiology this is called the non-linear dynamics of infection. A really interesting paper was recently released which highlighted the potential for Behavioural Economic interventions to harness the power of this non-linear relationship between the infected and the non-infected to slow down transmission rates.

Traditionally, economic interventions have been studied in isolation in field experiments by the use of Randomised Control Trials (RCT’s) and these very rarely take into account the network effects of interventions. Using a paper about hand-washing in India as an example we can look at the network effects of interventions. When a group is treated with an intervention in the case of infectious diseases, reducing the infection in one person can significantly slow down the infection rates of others. To put it simply, if one person infects a certain number of people, making this person less contagious (by effective hand washing) this can quickly reduce the amount of others infected with large returns to scale. The authors of the paper mentioned at the start of this section tried to model exactly that using a SIR model which is commonly used in epidemiology. They show in the graph below that with a saturation of treatment levels of 20% and 60% respectively, we could significantly flatten the curve of the proportion of the population infected. This would make it much easier for our health systems to manage the pandemic and reduce economic and social costs. The interventions would also have network effects in another way. For every person ‘treated’ and undertaking good new habits, a a fraction of people they come in contact with (in person or online) may also undertake these good habits. These social effects could be compounded with tools such as social media campaigns. Effectively, behavioural economics could harness the same non-linear dynamics the virus uses to counteract the exponential growth.

Image for post
Image for post
Haushofer & Metcalf (2020)

Behavioural Economics on the personal level


Sanitation is a fundamental part of defeating this virus and this is where Behavioural Economics can prove very useful as quite often behavioural findings can be counterintuitive. For example, one Psychological study showed that when asking individuals to count how often they touched their face in a set period of time they actually increased how often they touched it. Therefore, it might not make too much sense to tell individuals to stop touching their face. To attempt such drastic behaviour change in such a short period of time would also be increasingly difficult. The research on this area is relatively bare, however.

In times of crisis, it would be impossible to have a swift large scale replacement of bathroom infrastructure, but small behavioural tweaks can go a long way. Most office buildings are now installing hand sanitising stations, where and how they are placed can have a large effect. Capturing attention is vital. One study showed that attaching flashing lights to the hand sanitising stations (HSH) significantly increased usage, while another showed that having them in clear and visual places was much more effective than just having a larger amount of station stations. Therefore, it would suggest that having a few prominent stations is much more effective than just placing them all over the place. The Behavioural Insights team have also highlighted that bright imaging and less words on infographics can make hand-washing information more effective.

Dealing with isolation

With humans being naturally social animals, being told we have to isolate in our homes for potentially months on end is not nice news. There is numerous potential issues that could arise from this. Firstly, individuals are animals of routine. Having routines make it easier for us to structure and do more with our day. Once an activity becomes part of a routine — there is mixed evidence on how long this takes but between 30–60 days is a good approximation — then it becomes easier to do and requires less physical and mental exertion. Therefore, throwing people out of their routines can pulverise productivity and therefore (Economic) output. There are a few things that Behavioural Economics can do to help you stick to your routine. Most of them are very commonsensical. Firstly, public commitments are a great way to motivate yourself. People are more likely to stick to an action if they have publicly committed to it. This insight was actually used by President Obamas campaign team in 2012. Therefore, if you make public your objectives, such as a 30 day fitness challenge or to do some set piece of work in a time frame, you will be more likely to do it. This could be sharing on social media, or within your team in work. It might be a nice idea for managers to ask their employees to write down publicly at the start of the week their objectives and share them with the team. Even without sharing your results of your tasks with your team, the act of publicly sharing might just motivate you to go that little bit further. Finally, Behavioural Economists have studied intensively the role of ‘Choice architecture’ in humans decision making. There are numerous interesting examples in here ( see the jam jar experiment, the role of defaults, framing and, anchoring) but the gist of it is that the environment you make your decision in is really, really important. Therefore, simply make the decision easy for yourself. If you’re working from home and struggle to get out of bed in the morning then don’t leave your laptop next to your bed at night. There is a significant gap between intention and output and intention is often highest right before bed and lowest right when you wake up. Therefore, make decisions at night to make your decisions in the morning easier.

So what can I do about it?

There are numerous things that you can also do to contribute and harness the power of understanding others and your own irrationality. First of all, if you are in a position of power you do have to have slightly more responsibility. Individuals often attribute excess support for other individuals opinions if they have a higher level of authority. Therefore, if you are a manager in a firm or someone of authority in any sense, whether you like it or not, your actions will most likely swing peoples behaviours slightly more. Therefore it’s imperative that you set the right examples. If you are such a person in a position of power, you can double down on your superiority in the interests of everyone by making it easy for individuals to follow you. One of the most important aspects of influencing someones decision is to make that decision easy for them to do. No matter how much motivation someone has to conduct a behaviour, if there are large hurdles in the way, they might just not do it. Therefore, make it easy for individuals to wash their hands by placing soap in the right areas as discussed earlier, or allowing individuals to change all their meetings to Skype which allows them to stay at home.

It’s quite well known that individuals like to follow the herd, but to the extent they do is really quite often understated. Have a look at the experiments run by Solomon Asch in the 50’s if you really want to see how badly individuals can be influenced by their peers. However, understanding herd behaviour and how social norms effect individuals can be a useful tool. A great example of this is the paper which used Smiley faces and neighbourly comparisons to reduce energy consumption. Therefore, if you can create social norms around certain behaviours — say hand-washing — you can significantly increase this behaviour in others. The more people you get into the herd, the harder it is to resists its pull.

Finally, to conclude, despite Behavioural Economics not being an outright solution to most problems its often a plaster large enough to make significant improvements to systems or structures that currently we have no alternative to. Counterintuitive findings from Behavioural Economists can help us from straying down the wrong path in extremely complex system that is human decision making. These findings can save hugely significant portions of time and money and in the case of pandemics — lives.

Behavioural Economic insights are one of the only tools that can harness the intrinsic power of an epidemic and turn it on itself.

Written by

Probably the best Scottish Economist since Adam Smith. I write about Economics, Psychology, Philosophy, and Data Science.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store