• Behavioral economics at ASHEcon

    I attended all or parts of six sessions at the American Society of Health Economists (ASHEcon) conference today. Pulling way back from the details, one strong impression is that behavioral economics has firmly taken hold as an important and accepted paradigm in health economics. For example, Daniel Kahneman’s Thinking, Fast and Slow was referenced in at least three of the talks I heard, including Randy Ellis’s presidential address. The book has been on my reading list, but I have not read it yet.

    The recognition that humans are not fully rational, and particularly not when it comes to decisions in the realm of health, is a giant step forward. Of course one still finds a few economists (and non-economists) bending over backwards to defend neoclassical theory from reality. But, by and large, it seems the community of health economists has begun to accept that theory as incomplete, even if still useful in some circumstances or as a starting point. Being an empiricist, I find that a welcome development.

    More at TIE on Kahneman here, which links to two other posts about his work.

    @afrakt

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    • In a way you have already read much of Kahneman’s book if you are familiar with his (and Tversky’s) research program.

      I still recommend it as a great and well written single source reference for much of their most popular work and ideas.

      Is not your comment

      “The recognition that humans are not fully rational, and particularly not when it comes to decisions in the realm of health, is a giant step forward.”

      an indictment on many health economists?

      I’m relatively young, but have always found it strange that it has taken so long for health economists to begin abandoning the notion that humans don’t behave like perfectly coherent robots when it comes to decision making involving their health, especially considering all the evidence that has been accumulating for 40+ years that they don’t.

      On a somewhat paradoxical note, most health economists are quite comfortable with the notion that health care markets don’t behave well enough to treat them like other markets for goods and services, so why all the trouble with non-standard, i.e. quasi-rational, human behavior models?