July 18, 2013

Tax breaks for the healthy could change the way we live

Posted in Behavioural Economics · 56 comments ·
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Okay, hands up: whose family doesn’t have rows over loo seats, the state of the jacks and the men and boys in the family not being able to aim properly? Girls, tell me you haven’t been driven demented by your man and his inability to hit the target? And mothers of young sons: don’t tell me the ponds of pee around the base of the loo are not an almost daily chore! We have all been there.

Now can you imagine the hassle of running a gents public loo, let’s say in a football ground, large pub or an airport? With this in mind, one of the most innovative ideas I have ever seen was presented to me in a bar in Belgium many years ago when I was a student there. In the urinals, about halfway up the porcelain was a fly. At first, I thought it was a real fly, but it didn’t move. However, the static fly in the urinal did something weird to my behaviour.

At the sight of the fly in a urinal, something very odd happens in the behaviour of the average man. Instead of unfocused peeing, the static fly brings out the hunter in us.

The act of urinating suddenly becomes a duel, where all our concentration is centred on drenching the fly. For an instant we turn into a sharpshooting Shane Long in front of goal, deadly, precise, calm. One-nil to the boy, curtains for the fly.

Then, with the inner satisfaction of a job well done, we zip up, head out and the loo is infinitely cleaner, the cleaners’ job infinitely less unpleasant and the upkeep of the jacks generally better served. More importantly, the behaviour of men has changed in such as way as to make the man himself the instigator of this cleaner environment.

Years later, I read a fascinating book called ‘Nudge’, which explores the relatively new area of behavioural economics. The fly is cited in the first chapter and apparently it was an innovation first unveiled in Amsterdam’s Schiphol Airport in the 1980s. It was such a success in Holland, where cleaning bills fell, that the idea quickly spread to neighbouring Belgium and beyond.

This experiment tells us that we can change people’s behaviour for the greater good, even when that behaviour seems ingrained. This is hugely significant because if people’s behaviour can be changed, if we can be ‘nudged’ in certain directions by incentives, consider how many positive ramifications of changing our behaviour today might yield?

Sometimes it is easy to think of economics as being only about banks, interest rates and defaults, but economics can also be deployed in a variety of ways that may help us all by helping us help ourselves.

In the case of the fly in the urinal, the ultimate saving was in the cleaning bill and general state of public loos, but now consider the case of public health. Imagine the huge savings in the future if we changed people’s behaviour now, which could reduce dramatically the incidences of behaviour-related disease?

Let’s consider prostate cancer.

Prostate cancer rates in Ireland are the highest in Europe and amongst the highest in the world. One in eight men in Ireland will be diagnosed with prostate cancer in their lifetime; this is comparable to a woman’s risk of developing breast cancer, which is 1 in 9. In sorry contrast to breast cancer, where awareness has been heightened by brilliantly successful campaigns over recent years, prostate cancer is still rarely discussed in public.

That’s the bad news. The good news is that prostate cancer is over 90% curable – if detected and treated in its earliest stages.

Latest figures show that in 2010, 3,125 men were diagnosed with prostate cancer in Ireland, a small increase on 3,079 in 2009. Tragically, over 500 men die of prostate cancer in Ireland every year.

We know that men living in Western countries are more likely to get prostate cancer than men in south and east Asian countries. This may be because of our Western diet, which contains less fruit and vegetables than in other parts of the world and much more dairy, red meat, sugar and processed foods.

Doctors agree that eating a healthy, balanced diet with a wide variety of foods, including plenty of fruit and vegetables, may help to prevent prostate cancer. Like many cancers, those in the highest-risk categories are men whose fathers, brothers or uncles got prostate cancer. However, if weight, diet or booze increase the risk of getting prostate cancer, imagine if we could change behaviour today, to prevent diseases tomorrow? But we know from a variety of areas such as smoking or saving for a retirement decades ahead that we humans don’t care too much about the future because today it seems so far away. So we take risks.

If someone says to you, eat more fruit and veg, drink fewer pints and go for a decent walk everyday and you could reduce your risk of prostate cancer in the future, how many of us men would change our behaviour tomorrow?

But now imagine that we were incentivised to change our behaviour by something like a tax break for being healthy at 40, 50 and 60? This might sound radical but it’s no more radical than a tax increase at a certain random income figure so that earning a euro less than that figure saves you from the tax and earning a euro over that figure penalises you with the tax.

It is important to allow people to change their own behaviour, so you give people plenty of choice.

Indeed, there could be various gradients of incentives, allowing you to change behaviour gradually or rapidly or not at all.

In the years ahead, access to data and computer power to process this data will allow the Government to play with ideas like this, which could measure changed behaviour but would allow people to choose themselves if they want to avail of the incentives or not, without prejudice.

The emergence of behavioural economics will make all these ideas more and more normal in the years ahead and the emergence of big data will make these things more and more possible. Equally, the fly in the urinal shows that people can be ‘nudged’ to do the right thing for the benefit of themselves and others.

Behaviour can change and some changes could dramatically affect our health and the health budget. It may sound fantastical now, but it’s all out there. Welcome to a brave new world.

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  1. Did the fly have a name ?

  2. 5Fingers

    Austerity works for health. People who lived through the great depression, food rationing during and after the world wars all showed demographics of improved longevity and better health. Oddly enough, the quality of the food was not the issue as as long as you had sufficient basics.

    So solution is very simple. Ration food and make people healthy. Tax the living daylights out of sugar booze and pretty well everything :)

  3. Thee

    Ah, but doesn’t behavioural science also say that incentives have to be instant and obviously linked to the behaviour to work? So rather than a direct tax break, if you got a specific (tax-break-funded) amount of money presented to you by the checkout clerk when you bought a load of fruit and vegetables, *that* would be incentivising.
    So would stalls with fruit treats beside your seaside walks (which for me end up with an ice cream from Teddy’s in Dun Laoghaire).
    So would having fruit at the checkouts instead of sweets in the supermarkets, and having the vegetable stalls near the checkout – as Aldi does in some stores with its Six Cheap Deals or whatever its weekly fruit and vegetable offers is called.
    And what about daily walks funding charities? We already run marathons for charity, but what about walking the dog and money going to charity?
    And rather than the current plan to fine cyclists a stonking €50 for cycling on pavements, etc (which is often the safest option, if you do it quietly and calmly), what about rewards for cyclists who cycle beautifully and legally? Even a little enamel “safe cyclist” badge presented for good cycling would be an incentive.

  4. It is wishful thinking to propose a tax break that is determined by the choice of lifestyle a taxpayer chooses because it is not practical and Revenue knows this would be abused very easily .

    I am reminded how the government calculate the number of tourist that arrive into the country by including returning emigrants .Thus in reality The Gathering will certainly corrupt the effectiveness of the true meaning of the purpose of the data .In my mindset this reporting confirms that all emigrants are in reality foreigners with an Irish Passport living outside the country and they cannot wait to see the back of them .

    Whether the abuse of reporting is by the citizen/ taxpayer or the government the opportunity given by Revenue will not be entertained to empower the taxpayer .That would deflate the PAYE system the main money bags system used by Revenue.

  5. Lius

    David,

    I think a health incentive in the form of a tax break would be complicated for an idiot Government to implement and also easy for the “average” man to ignore.

    The easiest way to deal with this issue is tax on unhealthy foods and drugs, thus making them too expensive for people to over indulge in. e.g. fat tax, sugar tax, tax on cigarettes & alcohol, etc. I always find that the simplest solution is always the one that works.

    Slow News Day???

  6. michaelcoughlan

    Hi,

    The best way to achieve the goal of eating more fruit and veg would be to design an interactive plate with a picture of claudia schifferr in lingerie for men and Bressie in similar for women. The more fruit and veg consumed the more clothes come off pun intended.

    Hilarious article.

  7. 5Fingers

    I missed that one…big data to modify behaviour. Hmmmm… Why are there alarm bells ringing. Who polices the police or monitors the monitors. I suppose it coming like it or not.

    Actually it is an old idea born from the first time people stated to collect stats to inform to improve. What is so powerful now is the minute level we can instantly cross correlate and profile anyone with very scant initial information.

    With the state of our democracy today I think we need to tread very carefully. Public awareness of what this stuff can do is abysmally low. Health may be the least of of our problems.

  8. tomahawk

    Cleverclogs nudging around the edges is just that.
    The danger in introducing more nudges (we have plenty already) is the increase in the ‘sense of entitlement’ mentality factor which is why the country will stay ruined for most of society.
    I was nudged by the bank to borrow stupidly.
    I was nudged by my precious medical card not to take on extra work.
    I was nudged by the sight of Denis O’Brien not to pay any tax.
    Bless me father for I have been sinned against
    A blank canvas is needed for this society to form proper ground rules for it to work.
    We have had nudge nudge wink wink for long enough and it only seems to work for the winkers.

  9. ex_pat_northerner

    Well from flies to Peeballs – directly related to the prostate cancer risk : http://www.peeball.com/home/default.asp The idea being if the flow is constricted, there may be a problem.
    In general men are worse with regards to going to the doctor than women, as you say how can you change that.
    I wonder what all this debt stress on families is causing in terms of future well being. If the Government really wants to improve the future health of citizens, then some sort of debt relief is necessary. But we’re stuck in a short term (5 year government) policy system.
    Secondly, when GDP is the only means of measuring economic growth, then there is a problem. Take simple littering. This is behaviour I’d love to change – whether its chewing gum/dog crap on the pavement, to the over flowing bins on the beaches or simply the car passing by tossing the wrapper out of the window.. but here’s the thing.. littering adds to GDP and employment statistics.. As someone is now needed to be employed, and human activity is required in order to clean up the littering.

    • Adam Byrne

      Cigarette butts are the worst. How can anyone do that?

      I mean, pollute the environment with them.

      All smokers are tossers – that’s how.

      • 5Fingers

        I beg to differ. Ash is good for flowers and fruit development, nicotine is not a bad weed killer and butts provide employment for clean up.

        • Adam Byrne

          Quality of life Philip.

          I don’t give a flying f**k what smokers do to themselves but we have to put up with them and smell their shit.

    • paddythepig

      Employing someone to clean up litter does not add to GDP.

      • ex_pat_northerner

        Paddythepig, Were you one of the crew in charge of Anglo.. or help the two Brians with the bailout ?
        GDP = sum of expenditure on all final goods and services produced in a country, and includes government expenditure. Its a measure of economic activity (but as David kept pointing out selling houses to each other may count towards GDP, but there is no quality index within GDP.

        Here are some other ways to boost GDP. http://mises.org/freemarket_detail.aspx?control=118

        • paddythepig

          Correction taken, but you should cut out the smarminess.

          • bonbon

            And he should drop the scatology(Wiki), like DMcW should too. Economics does not spontaneously sprout from a dogs dinner!

            Reminds me of the “scientists” at the Academy of Lagado that Gulliver met – trying to recover the dinner from, well…

            And in the next room sunbeams from cucumbers, the green dream!

  10. Pauldiv

    Hilarious but interesting.

    There was a program on BBC1 last highlighting food poverty in Britain and three chefs were given the challenge to produce a healthy meal for £1 per head. They struggled to stay on budget.

    They did manage to prove that you can eat healthy food on a budget and I have always known that but many people don’t have a clue about basic home economics never mind on how to prepare and cook food

    In first year at our secondary boys had to take home economics. The cookery classes were interesting but when they made us do sewing all the boys had long faces. I have been an expert at macaroni and sewing trouser hems ever since. We had to mend our clothes back then but the food was healthy. I prefer veg to chicken nuggets and make fruit juice by the bucket load. It’s just common sense and I don’t need to be paid for making sensible choices. That sound like nanny state spoon feeding

    • paddythepig

      I agree. Home economics should be compulsory, and you should not pass your leaving cert without reaching a good standard. Too many Irish boys were spoonfed by mammy, and can’t boil an egg.

  11. Kev

    David.

    Economists should be solving the debt crisis in Europe, not talking about urinating on flies on walls (altho i like your story!).

    Please examine the process of by which money creation.

    There are millions of people’s health affected by this debt based system (stress, suicide, broken relationships, poverty, hunger, injustice,

  12. ex_pat_northerner

    David, what do you make of the Gneezy Rustichini Aldo (2000) ‘A fine is a price’ study (referenced in David Orrell Economyths p234).
    The study looks at moving from social norms, to market norms, then back again.
    Parents had to pick kids up from Creche. Social Norms dictated that they felt guilty about picking them up late so very few late pickups [most of us with kids have had the phone call :-)] A fine was brought in. Parents felt less guilty and late pickups increased as parents thought ‘well I’m paying for this’. Parents seemed quite happy with Market norms governing behaviour. However when the fine was removed, and a return to social norms was required Parents continued to operate on Market norms.. indeed now they saw a late pickup as getting something for free.

    I worry about incentivising people to do some, which social norms dictate they should do anyway, as then there’s the attitude that ‘its somebody elses job’. Eg. take speeding. How many on here have passed a speed camera above speed limit, and because its not flashed gone ‘phew got away with it’. Interestingly here in the North, if its first speeding offence, generally offered a driver awareness day with no points, for a bit more than the fine, in an attempt to slow people down. Ie a mixture of market norms (no points so cheaper insurance) and social norms (driver awareness) at play, but the real aim is an attempt to make speeding socially unacceptable.

  13. Kev

    David,

    Economists should be solving the debt crisis in Europe, not talking about urinating on flies on walls (although I like your story!).

    Please examine the process by which commercial bank money is created and destroyed.

    There are millions of people’s health affected by this debt based system of money creation through stress, suicide, broken relationships, poverty, hunger, forced competition between countries, injustice, inequality, inflated house prices and land monopolies, perpetual growth on a finite planet to remain stable, environmental destruction.

    http://www.positivemoney.org/

    As the Gatekeepers of the design of this economic system, economists are failing to address the real issues with the public.

    If I designed buildings (Im a structural engineer) like economists design the economy then building collapses would be commonplace….and I would be put in jail.

  14. Irish PI

    Ok,intresting idea.But I dont really fancy living in a 4th Reich/EUSSR strength thru joy society where we are all our every morning at the crack of dawn chucking medicne balls at each other for the benefit of our health and tax breaks.I prefer to kip until 10AM and then work through untill 2 or 3AM in the morning.Thats just the way my body clock and persona is. Anyways,my take on this would be,instead of nannying us to death,how about a !”Take responsibility for your own goddam life choices and not expect the state and society to wipe your mouth nose and ass when you screw up.”
    Put it like this you are now a rational full age adult.We all know that smoking is bad for you.You want to smoke??Go right ahead…Two packs,three packs…Heck if you want to do ten packs a day off you go…More power to you and the Govt and bondholders thank you for it too in the revenue…But DO NOT expect free cancer treatment or medical care for a self inflicted injury or disease!!! Expect plenty of help getting you off the weed from society,your choice if you dont want to use it for your smoking,eating or drinking habit.
    Want to ride your motorbike without a helmet,no problem..Hope you got enough stashed away to pay for your private nurse when you are a drooling cabbage after coming off it one day whether it is your fault or not.Wanna go run in front of 800 hundred kilos of pissed off bull in Pamplona?Dont xpect us to fly you home by air ambulance.

    Cant stop your kid stuffing garbage in their faces???Try being a parent and quit buying the junk food in the first place.Yes,it is tough ,with two parents working keeping a roof over their heads,yada,yada,yada,But then again there was and where was an adult choice and decision making process when you bought a 500 grand shoebox,built by McShite Bros builders with a 3 hour commute from the wilds of Cavan to yor 60k gross paying job in Dublin??Peer pressure obviously didnt stop in Ireland when you left your teens.

    Putting this brutally, maybe it is time to start culling the human herd abit.Or better still,let it cull itself .Nature,when a pouplation of a certain species gets out of balance cull themselves to the proper levels.Mice for example,if there is an over pouplation of mice in an area,they start dying off from Heart attacks until they reach a balanced pouplation again. So I wonder betimes do things like ebola,black death,and the 1918 flu pandemic,were they natures way of thinning us out abit?Being persistent and smart little critters that we are,we no doubt wil devise cures for all those,bar our greatest one,lack of basic personal cop on!
    So instead of trying to shrink our personal freedoms,lets have plenty more freedom to eat,drink,smoke,inject,snort.Do as much dangerous activities as you like and be able to play around with as many dangerous things as you like too.Because as a responsible adult you should know the dangers and consequences of your actions.If you dont,well no great loss as you have culled yourself from the human herd and hopefully not taken anyone else with you in your stupidity and have contributed from your own monies for your injuries to self or caused.

    • Pauldiv

      Smoker on 20 a day

      €10 x 365 days x 20 years = €73000

    • michaelcoughlan

      Excellent.

    • 5Fingers

      To be honest, the environmental load of humans is actually very low in spite of their visibility. We after all are mostly bacteria (80-90%), so really even if you do die off (nicotine pickled or not), a lot wanders off and colonizes something else. The reason I think humans make such a fuss about their inflated presence is rather like the phenomenon of how people instantly see other who drive same cars, same fashion etc.

    • cooldude

      Excellent comments PI. Personal responsibility is the only way but David is a statist at heart and believes the only way forward is the government sticking its big nose everywhere. As you point out so well this is usually a complete waste of time. We live in an era when there is no idea about living a lifestyle to avoid degenerative diseases and the only health stats that are issued are about cure rates from illnesses instead of avoidance rates. For anyone actually serious about taking personal responibility for their health a very good place to start is http://www.mercola.com This is the largest natural health website in the world and Dr Joe Mercola gives great insights and advice on all aspects of health. The search engine is particularly good and you can check out lifestyle choices to avoid any particular degenerative disease although they are all related. Anyone who expects the government to do anything for them is going to be badly disappointed. Those guys have no clue about anything especially your physical and financial health.

  15. martino

    Seeing the sunburnt obese clutching cans of Coke in the heat is a sight that brings out those sentiments in me also PI.

    • 5Fingers

      And it is usually diet coke.

      I predict a generation or two in the future when our genetically enhanced sweat glands will be tweaked to issue forth SF 50 lotion from our pores courtesy of aspartame enriched diets. Belly wheel prosthesis will be available with a tax break for those to generate the highest GDP as they munch their way to perdition. Resulting fecal output will be use as a radiation shield for dwellings in a new glistening ozone free atmosphere.

      Big Data means Big Diets and Big Turnover. Burrrrpp!

  16. 5Fingers

    Rich-poor, Healthy-sick, Intelligent-stupid, Beautiful-ugly, Happy-sad, Interesting – boring, Agreeable -grumpy, Independent – dependent, Famous- unrecognized, etc…enough to make one mentally ill. Where is that Prozac!! Good job we have Fluoride in the water :)

    There is a huge body of evidence and measurement around adherence to medication, avoiding unhealthy habits. Fact: Addiction is a real problem. Genetic predisposition is a big problem. Add in anxiety (for whatever reason) and a whole host of other pressures. And while we might get people to stop pissing on the floor, and engage in increasingly anally retentive exercises for the more odorless among us , might I suggest we try and show a little compassion to all our fellow underlings.

    Suffering, disease, decrepitude, loneliness will not go away by simply by issuing tax credits by whatever route – indeed i think it would result in another set of self righteous assholes making their presence felt. Better if we deliberately fostered the growth of non-pontificating listeners out there or am i asking for too much?

    • Pauldiv

      I don’t understand self-righteousness. Added to bitterness, prejuduce, anger and self hatred I’d argue that such traits in a person are just as likely to lead to cancer as smoking or bad diet. Our physical health is linked to our emotional health and this is why we need to take care of our minds as well as our hearts. All the gold in Ireland could not buy such basic common sense.

      The pressure to conform is overwhelming and people today are dis-empowered and impotent. The nasty people (the self righteous fire and brimstone types) tell us what to think and want to shove their opinions down our throats.

      You can sense this is not good for you when you switch on the tv. Hearing Vincent Browne’s voice makes me turn off the set. Wouldn’t it be great if you could just lift a remote and switch off the next self-righteous asshole that crosses our paths?

      It’s almost enough to make you want to demand they put MORE fluoride in the water lol.

  17. Adam Byrne

    Douglas Rushkoff Makes the Digital Economy Work for You

    http://www.strategy-business.com/article/00212?pg=all

    • 5Fingers

      Cracking article. This is hinting at the real problem.

      By the way read about Ivor Browne in the IT Saturday 20 Jul. Again another angle of same thing. All seems to be hinting on this need to be more in the present with others (in a very matter of fact way ) rather that being stuck up ones own backside worrying about what may be.

      Instead of the clinical non vitalist view of man as machine to be behaviorally modified why not economic encourage man as spirit living in present.

      • bonbon

        Man is neither machine nor animal. The future is the intention of all human action. The behavioral intention is to bestialize, simply make monkeys out of us. Then culling could proceed.

        West Brit’s making chimps of themselves, while scatologically making a mess of their cage is a spectacle. Disgusting.

  18. Adelaide

    Breaking News: Detroit Files For Federal Bankruptcy

  19. Ryu Hayabusa

    Hi,
    An interesting observation though I wonder how easily applied in a real life scenario…. especially by the shower of cretins at the tiller at the mo.
    How about expanding it out to ‘nudge’ the proportion of filthy individuals who aren’t too keen on washing their mitts to do so.
    People who are a bit laissez faire in this regard, it can reasonably assumed may be a bit lax in other areas of their general health &well being monitoring also, with the associated cost and longjevity implications.
    Perhaps a scowly image of Mr. Miyagi by the basin or drier. . . Wax on.. cleanser and water.. Wax off Dirt, urea residue plus anything else which may happen to be hitching a ride!
    Speaking of which, How many of the current Dail inhabitants would be included in the non hand washing clan, more than the average quotient i’ll wager for sure.

  20. Pauldiv

    Walking is great for the head. I was out at 6AM this morning and here is what I saw

    http://theramblingwest.blogspot.ie/2013/07/the-golden-hour-on-carrowkeel.html

  21. bonbon

    Well, well, DMcW majored in economics with a minor in scatological studies. Must be that recent visit to London? Or reading too much of the Wall Street Urinal?

    Cass Sunstein, author of “Nudge”, is promoted over at
    http://www.irisheconomy.ie/index.php/2013/07/12/behavioural-economics-and-public-policy/

    His (Irish?) wife Samanatha Power is trying to “nudge” us all into a war in Syria :
    http://www.independent.ie/irish-news/profile-samantha-powers-interventionist-policies-face-stiff-test-in-syria-29430421.html

    But What Is Their Secret?.

    A right behavioral rat’s nest!

  22. The Chinese are not wasting time pissing into the wind.
    They accumulate real money at a furious rate.

    http://sprottgroup.com/thoughts/articles/the-shanghai-gold-surprise/

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