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A Bias Towards Present: Why Investing in Personal Health is So Difficult, and Why Behavioral Economics Has the Answer


We have now entered a world where most the obviously good ideas are already taken. Someone has already invented the chair. Someone has already invented the desk. The spaces where innovation will occur now are in the crevices of where academic disciplines come together. By using paradigms from behavioral economics, I believe physicians and public health officials can utilize this interdisciplinary terrain to solve the U.S.’s current obesity problem.

In the late 1970s, famous behavioral economist Richard Thaler was fraught by the problem of modeling intertemporal decision-making, which involves people making decisions where the consequences, good or bad, arrive sometime in the future. As the data from his experiments began to pour in, he arrived at a breakthrough. He found what we medical students now take as an obvious truth: the human mind is poorly equipped to make decisions on events whose ramifications extend far into the future.

Specifically, Thaler’s experiments revealed that rational individuals put great value in the present. So much so that it takes a massive future reward in order to forgo the impulses of the present and invest in the future. This phenomenon can be observed by seeing how young adults invest in their 401(k)s or IRAs. Although they could save a little of their income now, they value the present far greater than the future. Thus, they invest little in their retirement accounts now, only to feel great regret of their actions as they approach retirement.  This phenomenon came to be called hyperbolic discounting or present bias. (Source: beim Autotrading Bitcoin Code)

Now, as we fast forward from the 70s to the present and away from the field of economics to look at medicine, researchers have been able to wipe out most life-threatening communicable diseases in the United States. Today, however, we see a health crisis unlike ever before. Obesity rates in the United States have reached pandemic levels. Preventable diseases linked largely to poor lifestyle choices are among the top killers in the country. For example, heart disease, the number one cause of death in the United States, claimed 597,689 lives in 2010, almost 20,000 more than cancer.

Physicians and public health officials alike have tried a variety of strategies aimed at stopping this rise in obesity. However, to date, none have proven effective. When dealing with infectious diseases, which were the most deadly killers for most of human history—and still are in the majority of developing countries—hard science and a wet lab are most often the solutions while time is the limiting-factor. However, now the tables have turned, and science can only help develop treatments because unfortunately, the root cause of most obesity-related disease lies in human behavior and bad habits, like indulging in unhealthy snacks or procrastinating on exercise.

While it is clear that genetics and other factors beyond our control exert a powerful influence on obesity, on average, the vast majority of these health problems can be curtailed with healthy lifestyle choices, and one solution is a legislative one. In a time before vaccine immunizations were (nearly) compulsory, present bias allowed parents to justify postponing immunizations for their children while those same parents were willing to spend massive amounts of money on dubious curative or treatment options for the same disease later on. In the United States and in most developed countries today, the vast majority of children are vaccinated because they are usually required to do so to enroll in public schooling. Thus, legislation served as a binding mechanism that helped correct for the present bias.

Another option is to utilize commitment devices. Our brain puts greater weight on default options, which gives rise to seemingly strange anomalous behavior. Experimental evidence shows that a phenomenon known as the endowment effect impedes individuals from switching to another option even if they find it more appealing. An example of the endowment effect can be observed when an individual purchases a mug for, say, five dollars, which they believe to be a fair price. However, she must be paid as much as double that buying price of the mug to sell that same mug. A rationalization for this phenomenon is that somehow after acquiring an item, the mind develops some sort of sentimental attraction to it, and thus does not want to let go of the item.

The endowment effect can be leveraged to enable healthy eating. In 2007, the Economic Research Service and the U.S. Department of Agriculture published a study showing that “changing the default menu on school meals to be more healthful, such as a fruit salad instead of French fries, may increase the likelihood that they will choose more healthful foods.”

The endowment effect should ensure that that few people will chose to opt out of the healthy lunch plan. These solutions are still imperfect and much work lies ahead. Public health officials and physicians can use these more textured models of behavior to approach the obesity pandemic from another angle. By melding the rigorous models of behavioral economists with physicians’ more nuanced expertise, we may be able to develop a creative strategy to attack obesity and encourage health maintenance.

Birju Rao Birju Rao (2 Posts)

Contributing Writer

University of Illinois at Chicago College of Medicine


Birju is currently a Class of 2017 medical student at the University of Illinois at Chicago College of Medicine. With a background in economics, he is particularly interested in the impact of internal organization in improving clinical outcomes and community health.