“When we think about irrationality two of the largest problems have to do with how we manage our financial situation and how we manage our health. And it is not just a problem of the poor. All of us have challenges,” explains behavioral economist Dan Ariely in this vlog.
He continues: “Challenges about how we take our medication, exercise, eat well and challenges how we don’t overspend and save a bit. But these challenges become particularly acute for the poor.” For people living hand to mouth, seeing a doctor is a huge expense and an uncertain one. Perhaps there is no doctor available or the transportation to the clinic is too expensive. Often, they prefer to delay the visit, “and as a consequence the situation becomes much more severe, creating much more financial and health devastation.”
For this reason, together with the Joep Lange Institute, Dan Ariely is exploring technological opportunities to help people in Kenya take better health and financial decisions.
Ariely: “One of the reasons we are doing it now is because of the cell phone. The cell phone is basically creating an opportunity to enter people’s lives. One of the main principles of behavioral economics is that the environment matters. Ten years ago, how could we have influenced people’s environment. We had no access to people’s environment, or it meant we had to go into everybody’s hut and convince them to do something. Now with the cell phone, we have an easy way in people’s lives and with those easy ways, we are managing to get people to at least start behaving in a way that takes their long term into account even in the short term.”
The Joep Lange Institute supports implementation research in Kenya, where Dan Ariely’s team of Center for Advanced Hindsight are working to help make the M-TIBA health wallet more effective by discovering ways to encourage users to set funds aside for healthcare. If we want to build a more inclusive healthcare system, we must first understand why people do what they do and how we can get them to make better decisions.
“How do we get people to take the right decisions? How do we get them not to just think about the moment, but to think about long term?”
Ariely: “How do we get people to take the right decisions? How do we get them not to just think about the moment, but to think about long term? We took one principle from behavioral economics called mental accounting and another called self-control.
We said what if we have a pot of money dedicated to health. A pot of money that you couldn’t use for anything else. Imagine you have a gift certificate, let’s say for Amazon, that money is dedicated to Amazon and you know you can only spend it on Amazon. And it is very easy.
What would happen if we would have the same thing for health, if we convinced people to put a little money away for a cause in an electronic wallet dedicated to health, this is basically what M-TIBA is. And what we are testing, what happens now if they get sick now. Do they know the money is there and do they go to the doctor earlier?”
Read more on why the Joep Lange Institute believes that behavioral science is an important driver for transformational innovation.