Tag Archives: Irrationality

Cheating ourselves to Death?

India is often referred to as the diabetes capital of the world, with around 41 million people living with diabetes in 2007, and projected to reach 68 million by 2025. In one of our engagements we were trying to understand how people living with diabetes manage this disease. One of the perplexing observations was that many people had the belief that their diabetes is under control. This conflicts with most data and expert opinion which suggests that majority of diabetes cases are uncontrolled.

We were trying to understand the source of this belief and started interviewing close family members of patients. One of the most interesting factors that we heard when we spoke to family members of these patients was that these patients “prepared” themselves before going for a blood glucose test. A week before they get their blood sugar tested, they would change their lifestyle – they would exercise, go for walks and control their diet. So when testing happens they get a more favorable result than their actual condition. It looks so irrational that people would cheat themselves into believing that their condition is better than it actually is, thereby putting themselves at risk of not getting the right treatment.

What explains this seemingly irrational behavior? Why would intelligent people who are aware of the dangers of the disease that they have, not want to know the truth and provide their physician with more accurate data for better decision making?

One of the moderators of decision making is the kind of mental models that people create in life that helps them simplify the world. While this is often great to improve efficiency of decision making, it could be deadly if used in the wrong context. A very popular example of a mental model being used in the wrong context is in the case of diarrhea. As Sendhil Mullainathan explains in this video, 35-50% of the mothers in Rural India think that they should reduce fluids if their child has diarrhea. They use an intuitive mental model of a leaky bucket – that you should not pour water into a leaky bucket if it has to stop leaking. This makes diarrhea, something that can be easily managed to the status of a deadly condition.

In the case of diabetes, the mental model that patients have is that one should not to fail a test. People look at each blood test as a test of how well they are managing their condition, thereby framing the issue as a judgment on their own capabilities. And not one that objectively measures the status of their condition and as an input into a treatment regimen that would help their doctor take better decisions.

How do we address such a condition? Breaking mental models is often a high-investment long-term game. One of the approaches that we take at Final Mile is to see how one can work with existing mental models rather than fight it. In this case, simply by encouraging people to adopt HbA1C instead of a spot test can help address this behavioral issue and get a more accurate measure of their condition. It is a simple intervention, but one that addresses the inherent risks of misdiagnosis. The other intervention is to address how doctors and counselors frame the test – it is important that patients do not see this as a test that they fail or pass but one that helps calibrate the medication for a chronic condition.

Changing the behavior of Open Defecation

Building toilets for over 50% of India’s population that defecate in the open is the primary goal of the Nirmal Bharat Abhyan (the erstwhile Total Sanitation Campaign or TSC), the flagship scheme of Ministry of Drinking Water and Sanitation.

The numbers under TSC indicate that 91,820,973 household toilets have been constructed which covers about 73.03% of households. The government has spent large sums of money to achieve this coverage. The current scheme allows for a subsidy of up to Rs.9200  per toilet including the labour cost to build the toilets to the National Rural Employment Guarantee Scheme (MGNREGS). Considering that the coverage was around 20% only 10 years, these numbers are impressive.

This however is only half the story. In a joint survey conducted by World Health Organization and UNICEF conducted in 2010, residents of about 54% households with toilets still continue to defecate in the open. In our research across 30 villages in North and Central Karnataka, we observed that this behavior of people not using their toilets was even higher. Its rational to conclude that people are just not aware of the importance of using toilets or they don’t understand the problems of Open Defecation.

But this is not what we saw in our conversations with the toilet owners. Most people understand that Open Defecation is not a desirable activity. They have an intention to use the toilets that they have built. But the action has been scheduled for a later time. At first, this sounds fairly counter intuitive. Why will someone go through the pain of building toilets and still not use them?  Although the toilets are subsidized, they still come at an economic cost. A classic situation where Awareness of problem does not translate into the desirable Action.

FinalMile is working on a project with Arghyam to find solutions to plug this Awareness-Action gap. There are a number of factors that explain this behavior. This Toilettrail blog has been set up to serve as a forum to discuss this wicked problem and share learnings from the project.

Some recent posts that we have published as part of this project:

Partial Usage: Cause or Consequence

A tale of two un-clicked pictures

The wicked problem of sanitation

Why do golfers miss an eagle?

Lets see if Prospect Theory can provide us with some explanation.

People’s perception of gain are defined relative to a neutral reference point corresponding to the current asset position. For example, a gain of Rs. 10 is perceived more valuable when we have Rs 100 in our pocket as compared to the same gain when we have Rs. 1000.

The same principle can be applied when we come to sports. In a very interesting paper, the authors explain why a golfer’s performance varies while hitting shots in the same physical setting. In golf, each hole has a par value which is the typical number of shots required to finish a hole. When the putt is one less than the par value then it is called a birdie. If they are under par by two strokes then it is called as eagle. Eagle therefore is better than a birdie which is better than a par.

By analyzing the performance of golfers in multiple tournaments, the authors found out that golfers perceive gain of Eagle with reference to a Birdie less than the gain of Birdie with reference to Par even though the real difference in the scores is the same. As a result, golfers were less accurate in their eagle putts as compared to their birdie putts. However, during the course of the tournament when the golfer’s reference point changed from his performance over a single hole to his overall score compared to his competitor,  the accuracy gap between par, birdie and eagle putts also came down.

Thus, changing reference points can significantly change people’s behavior. In one of our consumer research studies, we found out that people’s perception of a discount was different to an equivalent refund of the same amount.

The figures show that a 10% discount operates at the far end of the curve and thus appears much lower. However, a refund brings the point of reference close to the origin and thus appears much higher.

The same principle is also used by retail stores. Instead of offering discounts which are perceived by consumers in reference to the existing price, they offer promotions such as a free printer with a computer. Free promotions are processed independent of current price since their monetary benefit is not explicit. This resets the reference point close to origin and the gain seems much larger.

 

Currency Of The Mind

In the recent past academic literature is abound with discussions around how classical economics is poor at explaining or predicting human behavior. For example, what explains Warren Buffett – spend a lifetime earning, only to give away his immense wealth to philanthropic causes one fine morning? And what happened to that elusive utility maximizing, self interested being whom we use to build our economic models?

If Warren Buffett is an exception, let us look at ourselves and the world around us. We make new year resolutions only to break them the next week. We keep money in our savings account and take loans at higher interest rates or revolve debt on our credit cards. We swear to eat healthy only to binge on the sinful sundae that we just spotted on the menu.

Some classify this behavior as “irrational”, almost accusing us of going against the rules – the rules set by economic models. But today we have a much better understanding of how the brain takes decisions and what it tries to achieve in the process, thanks to advances in Neuroscience.

We now know that the currency of the mind is not money or economic utility, but emotions. We also know that the connection between emotion and motion is not just etymological, but a fundamental fact of the human (as also other animal) brain. Emotions drive us to action. What is more important, action that maximizes “Emotional Utility” and not necessarily Economic Utility.

Seen in this light, most human behavior falls into place. It explains why we pay money to engage in adventure sports, chase inconsequential goals in online games, enjoy gambling, prefer spending time on facebook rather than more materialistic pursuits etc.

If we appreciate this fundamental truth, we would have a much better understanding of what drives people to action. It will help design interventions that can influence behavior much far more effectively.

And, perhaps governments and other social agents can attach more importance to things that matter most to societies. For starters, we would stop referring to societies as economies and stop measuring progress using the single, dry dimension of economic growth. Instead, we would focus a lot more on understanding the rich and colourful world of emotions and what maximises them. It will help us define well being, based on what is truly important to us.

Development, or just a U turn?

Cows Tilling the Field | Machra

There is now a huge debate between development and its consequences. Development, which leads to change in the environment and displacement of those living in that environment.  It is believed that a fair compensation and rehabilitation – providing alternate livelihood – could amicably solve this conflict.

What is a fair compensation system for those displaced by developmental projects? The existing compensation structure is calculated on  principles of classical economics. According to this theory, the true value of all factors involved in a transaction can be calculated basis market forces. And as long as this value is exchanged in lieu of the land, it is a fair transaction. Any amount that is given over and above this amount makes it even more fair.

New sciences like Behavioural Economics and Cognitive Neurology looks at these as issues not only as numbers on a spreadsheet. Behavioural Economics have brought into focus the irrational nature of human beings and Cognitive Neurology helps understand the adaptability of human brain to new surroundings.  Looking through the lens of these new sciences, even a compensation thats much higher than market prices will be considered grossly unfair.

Why is this so? Continue reading Development, or just a U turn?