Friday, May 15, 2015

Uncertain Health in an Insecure World – 40

“The Nudge”

Health behaviors are the hardest to change.

Faced with ever-growing financial, demographic, security and social challenges, governments around the globe are struggling with very difficult decisions about the future of their expensive healthcare services. The stark realization that choice and competition may be the best (or at least ‘least worst’) option has been both influential and controversial.

But choice and competition can be manipulated by public policy and market forces.

Speaking recently with Sir Julian Le Grand (above) at University of California Berkeley about difficult decisions he made while serving as Prime Minister Tony Blair’s health advisor in 2003-2005, it is clear that leadership in this sector requires courage and consistency. Sir Julian has demonstrated the capacity to articulate the benefits of quasi-market reforms in healthcare for the general public, while advocating for public-private partnerships to benefit child care, elder care and long-term care for vulnerable populations.

Such leaders do not retreat in the face of right wing criticism of programs to reduce social inequities. Nor do they waiver when denouncing “zombie ideas” such as increased patient charges in the U.K. National Health Service.

Le Grand’s case in point was the 2006 St. Valentine’s Day Manifesto (Massacre?) in the U.K. House of Commons when Labour Party’s ‘Blairites’ overwhelmingly passed a ban on smoking in all public places, including private clubs and pubs. The smoking ban was likened by critics to Gestapo tactics, and its supporting politicians were called “dullards”.

But smoking prevalence soon fell among British males and females.

In fact, a 2014 Journal of the American Medical Association paper, published on the 50th anniversary of the U.S. Surgeon General’s first report on the health dangers of smoking, noted that while the global prevalence of smoking had decreased (see graph below), global population growth increased the number of daily smokers in 187 countries from 721 million in 1980 to 967 million in 2012.

Once out of government and back at the London School of Economics, in 2009 Le Grand proposed that so-called ‘Nanny State’ U.K. doctors sign permits for nicotine addicts to be allowed to smoke, and that this annually renewable smoking permit cost 200 pounds. He was pilloried in the British press.

Le Grand also proposed that food manufacturers be banned from adding salt, employers provide an exercise hour for all employees during work hours, and fresh fruits be offered as office snacks. Once again, he was lambasted, despite the known relationship of smoking to cancer and coronary artery disease, and the epidemic of obesity sweeping the sedentary nation.

Le Grand’s health policy approach was based on ‘The Nudge’, a concept also called libertarian paternalism, originated by Thaler and Sunstein (2008). The Nudge asks public and private institutions to push people in directions that will make their lives better – longer, happier, healthier – without eliminating their freedom of choice. People can opt in or out, avail themselves of healthy options, being gently nudged by small interventions that preserve choice and do not cause a loss of welfare. 
This is a viable alternative to paternalistic public regulations, taxes subsidies and endless educational programming.

At the time Le Grand noted that, “There is nothing evil about smoking as long as you are just hurting yourself. We have to try to help people stop smoking without encroaching on people’s liberties.” In response to public pressure and politics, the smoking ban was liberalized, and the permit price fell to 10 pounds.

Financial incentives are known to be an effective at encouraging smoking cessation.  Carrot & stick financial reward schemes show that people are more motivated to not lose money, instead of being rewarded. People with their own money on the line – skin in the game – are much more likely to stop smoking for six months. Some 21% of large U.S. employers offer incentives to stop smoking by passing lower health insurance premium costs on to non-smoking employees. This paycheck savings approach is less effective than employees who must worry about losing a deposit of their own funds if they start smoking again.

Given completely free choice, people make mistakes.

In 1738, David Hume wrote, “There is no quality in human nature which causes more fatal errors in our conduct than that which leads us to prefer whatever is present to the distant and remote” (Treatise on Human Nature). Such limitations to reasoning result in procrastination, continued addiction and what psychologists call akrasia.

Life was cheap in 1738, when there were no public healthcare systems and limited taxes.

The U.K. Murder Act of 1752 required that convicted murderers be hung within two days of sentencing. In the period between 1735 and 1799, 323 women were hanged for various capital crimes. On August 13, 1964, the last two men to be executed in Britain went to the gallows for a 10 pound robbery in which the victim was killed.

Limited willpower is not a new human failing. But failing health has become expensive.

Sir Julian modernized a big thought.

Is a 10 pound smoking permit the proper nudge to save a life, or the wrong price to be hung for?

In the Square, we believe a nudge is better than a noose. You decide…

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