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Towards a behavioural health economics: the psychologist’s perspective
Published in David Kernick, Getting Health Economics into Practice, 2018
The best known example of such context dependence is the asymmetric evaluation of gains and losses, which was first identified by Kahneman and Tversky,4 and has subsequently been shown to hold in a wide variety of situations. Put simply, people are much more concerned about losses than they are about gains. We can see this memorably in the so-called endowment effect. If you split people into two groups, and give each member of one group a mug worth about 5 euros (and the other half nothing), those ‘endowed’ with a mug will typically value the mug at around 7 euros, whereas those without will value it at around euros. Why? After all, a mug is a mug is a mug. One explanation is that those people given a mug very quickly incorporate it in their possessions (it becomes ‘their’ mug). To leave without a mug is a loss, and it is a loss for which one must be compensated. Whereas the reference point for those who never had one is different; acquiring the mug is a gain, and gains are valued less than losses.
Categorical Mistakes and Moral Biases in the Withholding-Versus-Withdrawal Debate
Published in The American Journal of Bioethics, 2019
The defense of ET is itself full of biases. First, Wilkinson and colleagues use biased language. They compare "the nonequivalence intuition" to “the Equivalence Thesis” (my emphasis). Furthermore, they describe the thesis that there can be morally relevant differences between withholding and withdrawal in terms of "aversion," "bias," "prejudice," having “irrational effects on decision making” (Wilkinson et al. 2019) and elsewhere as “omission bias” and “status quo bias”(Wilkinson & Savulescu, 2014). While it is both legitimate and laudable to reveal irrational aspects in ethics, superficial labeling of opposing views as biased does not do the trick. For instance, the status quo bias is based on the endowment effect (Kahneman et al. 1991), i.e., the effect “whichcauses an item to be viewed as more desirable immediately upon its becoming part of one’s endowment” (Bostrom and Ord 2006). Explaining differences in decisions on withholding versus withdrawing on psychological effects demonstrated with experiments with mugs, chocolate bars, and electric power plans or a single small vignette study with low response rate (Aberegg et al. 2005; Wilkinson & Savulescu, 2014) may do the trick if you are already inclined (biased) towards a specific view, but it does no heavy lifting ethically, if you are not.
Elizabeth Usher Memorial Lecture: How do we change our profession? Using the lens of behavioural economics to improve evidence-based practice in speech-language pathology
Published in International Journal of Speech-Language Pathology, 2018
Have you ever stood in a supermarket checkout queue and stayed in that queue even though another one was moving faster? If so, then you succumbed to the sunk cost fallacy (Arkes & Blumer, 1985). This heuristic says that we will value the time or money that we have already invested in something more than the fact that changing our behaviour (or queue) would be beneficial. In SLP practice, that sunk cost might be time invested in attending a course some time ago, it might be laminated picture cards or it might be a clinical routine in which we are now expert. Failure to change these is probably due to the sunk cost fallacy. A related heuristic is the endowment effect which occurs when things we already own are valued more highly than what others might be willing to pay for them (Kahneman, Knetsch, & Thaler, 1991). Thus, the photocopied resources we acquired as students stay in our filing cabinets, rarely used but too valuable to throw away. To partially overcome the sunk cost fallacy in regards to treating childhood apraxia of speech, all our ReST therapy materials are available online and we have tried to make creating new ones as easy as possible. This may mean clinicians are less likely to be averse to the change as the materials are easily available; we have, in effect, reduced the impact of the sunk cost fallacy and the endowment effect.
The tyranny of the SW quadrant
Published in Journal of Medical Economics, 2021
The foundation of the Endowment Effect is the Loss Aversion and Framing Effect. The Framing Effect, which has been extensively studied in psychology, suggests that people are heavily influenced by the presented positive or negative connotations of a hypothesis, and not the actual gain or loss. As a result, they assign more weight to a negative fact connotation. Based on this notion, in our case, the foregone utility has a greater impact than the gained utility i.e. in absolute terms, it assumes that the loss of a utility is greater than the gained utility.