Task 3: A Matter of Choice

 are bad habits rational?

 motivations behind quitting - monetary incentive
 biases

1. Are bad habits a choice?

 Heyman (Disorder of Choice): Addiction is not a disease but a disorder of choice.
o Local choice frame → drugs always look best “today.”
o Global choice frame → abstinence is optimal long-term.
 Bickel & Johnson: Reinforcer pathology = elevated demand + steep delay discounting
→ choices systematically biased.
 Rice: Defaults and status quo bias keep people stuck in unhealthy patterns.
 Empirical (Halpern, Kullgren, Davis): Incentives can shift choices, proving behavior is
still choice-sensitive.
Talking point: Bad habits are choices, but shaped by context, reinforcer availability, and biases.

2. Are bad habits rational?

 Locally rational: Immediate drug reward outweighs delayed costs (Heyman, Bickel).
 Globally irrational: Over lifetime, abstinence or moderation yields higher welfare.
 Prospect Theory: Risk-seeking in losses explains continued use despite harm.
 Empirical: People rationally respond to incentives (quit smoking when rewards offered),
but relapse when incentives end.
Talking point: Habits are rational in the moment (given biases), but irrational when considering
long-term outcomes.

3. Motivations behind quitting – monetary incentive

 Behavioral Economics principle: Incentives must counter present bias.
 Volpp: Lotteries & deposit contracts motivate more than simple bonuses.
 Halpern smoking trial: Rewards doubled quit rates; deposits more effective among
those who enrolled (loss aversion).
 Kullgren weight loss: Group-based incentives stronger than individual (peer
comparison, social accountability).
 Davis review: Contingency management = most effective evidence-based tool → but
effects fade once incentives stop.
Talking point: Monetary incentives work, but only if structured as immediate, salient, social,
or loss-framed.

4. Biases influencing decision making

 Present bias / hyperbolic discounting: Overvalue now, undervalue future (Heyman;
Bickel).
 Loss aversion: Stronger reaction to losses than gains (Volpp; Halpern).
 Probability weighting: Underestimate disease risks, overweight small chances (Rice).
 Overoptimism: “I can quit anytime” → relapse common.
 Status quo bias: Default → stick to bad habits (Rice, Volpp).
 Narrow bracketing: “Just one cigarette” → ignoring cumulative damage (Heyman).
  Peanuts effect: Small daily rewards feel trivial unless reframed (Volpp).
 Decision fatigue: Too many choices → poor adherence to health plans (Rice).
Talking point: Biases systematically tilt people toward bad habits and away from preventive
action.

5. What makes a choice irrational?

 Inconsistency with long-term welfare (Heyman).
 Time-inconsistent preferences: Switching between wanting to quit (morning) and using
(evening).
 Ignoring opportunity costs: Using drugs = giving up health, work, family (Bickel).
 Misperception of risk: Thinking harms are unlikely (Rice).
 Social discounting: Undervaluing benefits for others (e.g., baby’s health → pregnant
smokers relapse).
Talking point: Irrational choices = those driven by short-term biases, distorted risk perceptions,
and neglect of opportunity costs.

6. Different types of interventions (Does monetary incentive work?)

a. Constraining unhealthy choice
 Taxes, smoking bans, alcohol restrictions (Rice, Bickel).
 Medications (methadone, buprenorphine, disulfiram).
b. Expanding alternatives
 Community Reinforcement Approach (jobs, hobbies, social activities).
 Therapeutic Workplace (employment contingent on abstinence).
 Nudges: cafeteria food placement, organ donation defaults, auto-enrollment in insurance.
c. Monetary incentives
 Effective if immediate, frequent, loss-framed, or lottery-based.
 Volpp: Lottery contracts successful for weight loss.
 Halpern: Rewards doubled quit rates, deposits more powerful but less accepted.
 Kullgren: Group incentives stronger than individual.
 Davis: Contingency management most robust SUD treatment.
Talking point: Incentives alone fade after removal → must be combined with environmental
restructuring and alternative reinforcers.

Learning Goals:

1. What theories and concepts are connected to the topic?

 Behavioral Economics: integrates psychology & economics; explains why choices

deviate from rational models.
 Reinforcer Pathology (Bickel & Johnson): addiction = abnormally high valuation of
drugs + steep delay discounting.
 Local vs Global Choice (Heyman): bad habits emerge from focusing on
immediate/local rewards rather than global/long-term welfare.
 Prospect Theory (Kahneman & Tversky): loss aversion, probability weighting,
reference dependence.
  Bounded Rationality (Simon): limited cognitive resources → people satisfice, not
optimize.
 Hyperbolic Discounting (Laibson, Mazur): immediate rewards overvalued, delayed
rewards undervalued.
 Nudge Theory (Thaler & Sunstein): structuring choices (defaults, framing) influences
behavior.

2. What influences choice and decision making?

Influences on Choice & Bad Habits

Present Bias / Delay Discounting

 Definition: Immediate rewards overweighted, future rewards undervalued.
 Theory: Hyperbolic discounting (Laibson; Mazur).
 Example (Heyman): Daily drug use feels rational locally → binge equilibrium;
abstinence only better in global frame.
 Empirical: Contingency management (Davis review) – immediate vouchers increase
abstinence; when incentives stop, relapse rises.

Availability of Alternatives
 Definition: Lack of nondrug rewards makes substances disproportionately valuable.
 Theory: Reinforcer Pathology (Bickel & Johnson).
 Example: Rat Park → enriched rats use less morphine. Job loss → drug use rises.
Parenthood → abstinence.
 Empirical: Therapeutic Workplace programs (voucher for clean urine → access to paid
work).

Environmental Context (Stress, Poverty, Isolation)

 Definition: Stressors shrink capacity for long-term planning.
 Theory: Bickel & Johnson – recursive loop between person, environment, biology.
 Example: Divorce, unemployment increase drug demand.
 Empirical: Rice – families fail to enroll in CHIP due to barriers; Volpp – patients skip
meds even if free due to daily hassles.

Framing & Loss Aversion

 Definition: People more motivated to avoid losses than seek equivalent gains.
 Theory: Prospect Theory (Kahneman & Tversky).
 Example (Volpp): Deposit contracts for weight loss outperform simple bonuses.
 Empirical: Halpern smoking trial – reward programs had higher acceptance, but deposit
contracts (loss framing) were most effective among those who enrolled.

Defaults & Status Quo Bias

 Definition: People stick with default option even when change is easy.
 Theory: Nudge theory (Thaler & Sunstein).
 Example: Organ donation → opt-out (Austria ~100%) vs opt-in (Germany ~12%).
 Empirical: Insurance auto-enrollment increases uptake; medication auto-refills improve
adherence.

Cognitive Limits (Decision Fatigue, Choice Overload)

  Definition: Too many options or repeated decisions reduce quality of choices.
 Theory: Bounded rationality (Simon).
 Example (Rice): Judges grant fewer paroles late in the day; Medicare Part D
participants fail to choose cheapest plans.
 Empirical: Jam study (Iyengar & Lepper) – 6 jams > 24 jams in sales.

Social Influences & Comparison

 Definition: Social context shapes reinforcement value.
 Theory: Social discounting – addicts undervalue rewards for others.
 Example: Smokers relapse despite pregnancy → undervaluing baby’s health.
 Empirical: Kullgren weight loss trial – group incentives led to greater weight loss than
individual → accountability, peer comparison.

3. Why do people choose to use substances if they know that they have harmful
consequences?
Concept: People prioritize immediate reinforcement over delayed costs.
Theory:
 Heyman – local choice vs global choice → using drugs is “rational” locally because the
pleasure is immediate.
 Bickel & Johnson – reinforcer pathology (high demand + steep delay discounting).
 Rice – bounded rationality, defaults, too much choice → people don’t always process
risks correctly.
 Examples:
 Addicts continue smoking even while pregnant → undervalue baby’s long-term health
(social discounting).
 Skipping meds because benefits are delayed and invisible (Volpp).
 Empirical:
 Contingency management review (Davis): people abstain when immediate vouchers are
given, relapse when rewards stop → proves immediacy drives behavior.
 Talking point: “They use substances because the immediate reward outweighs the
delayed harm. Biases and context make the harmful choice feel like the best option in
the moment.”

4. How do biases influence decision making? What kind of biases?

 Present bias / Hyperbolic discounting: Overvaluing the now, undervaluing the future
(Heyman, Bickel).
 Loss aversion: Losses hurt more than gains help (Prospect Theory; Volpp weight-loss
deposit contracts).
 Probability weighting: Overweighting small risks, underweighting large risks (Rice →
people fear rare diseases more than common killers).
 Overoptimism: Belief “I won’t get addicted, I can quit anytime.”
 Status quo bias / Defaults: Sticking with current habits unless actively pushed (Rice →
organ donation rates, insurance inertia).
 Narrow bracketing: Focusing on single choices instead of long-term patterns (“just one
cigarette” doesn’t feel harmful).
 Peanuts effect: Small daily rewards undervalued unless reframed (Volpp, Halpern).
  Decision fatigue: Cognitive overload reduces good choices (Rice → judges’ parole
decisions, Medicare plan confusion).
 Empirical:
o Halpern smoking trial: people preferred reward programs to deposit ones,
showing loss framing + enrollment bias.
o Kullgren weight loss: group incentives leveraged social comparison bias.
 Talking point: “Biases systematically distort decision making — present bias, loss
aversion, defaults, and optimism all tilt people toward unhealthy behavior.”

5. What kind of principles are involved in irrational choice?

a. What makes a choice irrational?

 Time inconsistency: Preferring cake now but regretting it later (hyperbolic discounting).
 Ignoring opportunity costs: Choosing drugs means forgoing work, relationships, health
(Bickel → opportunity cost concept).
 Reference dependence: Choices judged against arbitrary baselines (Prospect Theory).
 Social discounting: Devaluing others’ outcomes (pregnant smokers relapse despite
baby’s health risk).
 Misperception of risk: Underestimating disease likelihood, overweighting rare
outcomes (Rice, Prospect Theory).
 Emotional decision making: Stress, cravings bias rational calculation.
 Heyman’s point: Using drugs is rational within the local frame (immediate utility), but
irrational from the global perspective (lifetime welfare).
 Empirical:
o Contingency management: people quit only when rewards exist → shows
irrationality isn’t inability, but bias-driven short-termism.
 Talking point: “A choice becomes irrational when it systematically contradicts long-
term welfare because of time inconsistency, risk misperception, and neglect of
opportunity costs.”

6. What are different types of interventions?

a. does monetary incentive work?
a. Constraining unhealthy choice
 Taxes on cigarettes/alcohol (raise unit price → lower demand).
 Restrictions (smoking bans, advertising limits).
 Medications (nicotine replacement, methadone, buprenorphine,
disulfiram).
b. Expanding healthy alternatives
 Community Reinforcement Approach (CRA): build substance-free
rewarding activities (jobs, hobbies).
 Therapeutic Workplace: paid work contingent on abstinence.
 Nudges: food placement, auto-refill prescriptions, insurance auto-
enrollment.
  Defaults: opt-out systems for organ donation, or medication refills.
c. Monetary Incentives
 Volpp (weight loss, adherence): lotteries and deposit contracts
effective; daily incentives counteract present bias.
 Halpern smoking trial: rewards more popular; deposits more
powerful among those who enrolled (loss aversion).
 Kullgren weight loss trial: group incentives stronger than individual
(peer comparison, accountability).
 Davis CM review: most robust SUD intervention, effects strong during
incentives but weaker afterward.
Principles:
 Must be immediate (to counter present bias).
 Work best when loss-framed (deposit contracts).
 Group-based increases impact through peer pressure.
 Lotteries leverage probability weighting.
 Talking point: “Incentives do work, especially if immediate, loss-
framed, or social. But effects fade if not combined with broader
structural changes and alternative reinforcers.”