The opioid crisis from a Thaler point of view
By Sarah Shin
The other day, I was sitting and eating with a friend, talking about school—as high schoolers do in 90% of their conversations—when he brought up his psychology class. Our conversation went something like this:
Him: “Yeah, my teacher is a big fan of side tangents. Yesterday, she spent like thirty minutes talking about why people don’t go to the doctor regularly even though they should.”
Me: “What? What does that even have to do with psychology?”
Him: “It was something about behavior—like people have other random-seeming factors in their lives that influence their decisions or something.”
Me: “Huh. So, people don’t go to the doctor because of other stuff that’s happening in their lives?”
Him: “I guess so. Hey, are you going to eat those chips?”
What does that slightly ridiculous conversation have to do with Richard Thaler? In his article “Unless You Are Spock, Irrelevant Things Matter in Economic Behavior,” Thaler presents the intriguing opinion that many economists often trust in the “magic of markets” to explain the why of people’s economic decisions, while ignoring the “seemingly irrelevant factors” that actually do influence those decisions. Along the lines of the conversation that I had with my friend, those “other random-seeming factors” that his psychology teacher brought up actually have an impact on people’s decisions, subconscious or otherwise.
For example, a first-generation immigrant may have more than enough money to attend several doctor’s appointments, let alone one, but perhaps he or she feels too self-conscious about the language barrier to ever schedule one. In short, Thaler argues that sometimes economists only see the black-and-white in the numbers and demand and supply graphs that make up their day-to-day world, while in reality, the world is so much more colorful than that—and in seeing only black-and-white, economists can miss the most effective solutions to problems. People are more than statistics on a page.
At the same time, however, the line between straight economic decision-making and the consideration of these seemingly irrelevant factors can be blurry, in my opinion. And to explain why, I’ll bring you into my thought process as I read this article; my thought process mostly revolved around this problem: the opioid crisis. The United States is in the middle of a huge opioid crisis, partially since doctors often prescribe opioids because 1) they’re easy to prescribe 2) they work. That is, opioids are addictive for a reason—they do take away pain. Because of that, in the short run, opioids may seem beneficial to both the patient and the doctor, but it’s when those opioids get out of hand that the problem surfaces.
As Thaler would probably say, the unemotional response would be to simply limit the number of opioids that doctors can prescribe or put some sort of protocol for determining when a patient’s condition can be deemed severe enough to prescribe an opioid (like the system that European countries have), but that doesn’t consider the many seemingly irrelevant factors that are present in this situation. If laws are put into place, restricting doctors, would doctors simply stop prescribing opioids out of fear of getting their licenses revoked or would they genuinely try their best to designate the best decision in such a confusing situation? Would patients begin to complain about how doctors aren’t prescribing medications strong enough to alleviate pain? Would that compromise the careers of doctors, which are often based on patient review?
With that, it seems the government has two options: either to ignore the seemingly irrelevant factors and somehow implement a plan that will limit opioid dispensing in pharmacies or to analyze those seemingly irrelevant factors and think of a solution that will encapsulate all the concerns. If anything, this scenario goes to show that Thaler is correct in that seemingly irrelevant factors do matter, but at the same time, perhaps the solution may be just to put restrictions on opioids and develop a system like Europe where addiction is no longer an issue. Nevertheless, economic thinking is slowly turning to a sector of study that also needs to consider the behavioral factors that can into play with how people interact with the market, because without that complexity, it’s easy to underestimate the power of the reason for people’s choices.
Sarah Shin is a high school student studying AP Macroeconomics. © 2018 Sarah Shin