The preference for cures over prevention is an alluring trap. Economists have a name for this well-known behavioral trait: time inconsistency.
Despite detrimental future outcomes, our senses demand instant gratification. Cures, with the action-oriented halo around them, offer that immediacy in abundance. Prevention, on the other hand, tends to be slow and boring. The cause-and-effect relationship of preventative measures can seem anchorless, unconvincing, and obscure. So understandably, in investing as well as our day-to-day lives, we favor quick fixes over long-term, disciplined approaches, and suffer the consequences.
In health care, the downsides of not making the right choices — of skimping on prevention — are darker and starker. Yet whether treating heart disease and diabetes or indigestion and migraines, reactive measures — tablets and injections — are preferred over simpler and less costly lifestyle changes.
For the impoverished, the cures-over-prevention approach has even graver consequences. And these are compounded by the urgency to make ends meet, which makes it harder to adopt the habits that promote good health and ward off illness. This creates vicious feedback loops of poverty and failing health.
At the macro level, inadequacies in health care take ever-changing shapes and forms. From the wealthiest nations to the developing world, health care is not an easy issue to resolve. Recently three of the world’s sharpest minds — Jeff Bezos, Warren Buffett, and Jamie Dimon — came together and pledged to create an organization to help provide affordable health care. Will they lead and create value in health care with the same dexterity and success they’ve achieved in their day jobs?
Earlier this month, the Indian government announced a program — reportedly the world’s largest — to provide government-funded health coverage for vulnerable families. India’s health care plan, like its counterpart in the United States, is motivated by good intentions. But mega programs are never easy to implement or manage. Both in the United States and India, deep behavioral changes at all levels will be required to make the new systems work. Above all, stakeholders in the health care infrastructure — government bodies, pharma companies, retail outlets, hospitals, health care workers, etc. — will need to align their interests for better health care outcomes.
Abhijit Banerjee and Esther Duflo, in their book Poor Economics, illustrate the useful role simple behavioral economics can play in getting health care right. Immediate incentives, such as food packets for those willing to receive vaccinations, can increase vaccination rates. Piped water can seamlessly shift the burden to chlorinate from individual households to better-equipped water distribution agencies. Behavioral nudges like these offer choices that are easy to make. So decision makers may want to cast behavioral science in a leading role in shaping health care change.
Apart from health care content, here are some of the other readings I found interesting in the last month or so. Happy reading and enjoy the weekend.
The Fun Stuff
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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