Bringing the patient back in: behavioral decision-making and choice in medical economics

Abstract

We explore the behavioral methodology and “revolution” in economics through the lens of medical economics. We address two questions: (1) Are mainstream economic assumptions of utility-maximization realistic approximations of people’s actual behavior? (2) Do people maximize subjective expected utility, particularly in choosing from among the available options? In doing so, we illustrate–in terms of a hypothetical experimental sample of patients with dry eye diagnosis—why and how utility in pharmacoeconomic assessments might be valued differently by patients when subjective psychological, social, cognitive, and emotional factors are considered. While experimentally-observed or surveyed behavior yields stated (rather than revealed) preferences, behaviorism offers a robust toolset in understanding drug, medical device, and treatment-related decisions compared to the optimizing calculus assumed by mainstream economists. It might also do so more perilously than economists have previously understood, in light of the intractable uncertainties, information asymmetries, insulated third-party agents, entry barriers, and externalities that characterize healthcare. Behavioral work has been carried out in many sub-fields of economics. Only recently has it been extended to healthcare. This offers medical economists both the challenge and opportunity of balancing efficiency presumptions with relatively autonomous patient choices, notwithstanding their predictable, yet seemingly consistent, irrationality. Despite its comparative youth and limitations, the scientific contributions of behaviorism are secure and its future in medical economics appears to be promising.

Keywords:

• Behaviorism
• counter-intuitive
• efficiency
• experimentation
• pharmacoeconomic assessments
• predictable irrationality
• revealed preferences
• utility-maximization

JEL classification codes:

• C91
• D83
• D91
• I12

Note

Transparency

Declaration of funding

This paper has received no funding.

Declaration of financial/other relationships

The author has no relevant affiliations or financial involvement with any organization or entity with a financial interest in, or financial conflict with, the subject matter or materials discussed in the manuscript. This may include employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties. JME peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Acknowledgements

The author is grateful to two anonymous referees and the editor-in-chief of this journal, Kenneth K. Lee, for helpful comments and suggestions. Initial discussions with Kelly Soldavin and Tanya Stezhka, and the editorial assistance of Charlotte McSharry, of Taylor & Francis are also acknowledged with thanks. The usual caveat applies.

Notes

*Much of this illustration draws from my ongoing research project on the comparative cost-effectiveness of medical grade, omega-3 fish oils in patients with meibomian gland dysfunction (MGD).