Overview
“Behavioral economics” is a field that incorporates psychology into economic theories and models instead of assuming humans are purely rational actors. It accepts as a constraint the fact that humans have limited time, information, and resources to make decisions, so they often settle for what seems “good enough” rather than finding the optimal choice. Even when we try to optimize, we might arrive at a “good enough” assumption of the optimal path. We also have a litany of biases at work, such as loss aversion that treats negative experiences as more impactful than positive ones or cognitive shortcuts like stereotypes.
Addiction has posed a big challenge for traditional economics since it cannot possibly seem rational to acknowledge that a substance or process could ruin your life and present no long-term gains but choose it anyways. Behavioral economics attempts to model addiction through additional concepts, such as delay discounting that argues people weigh immediate rewards heavily over future ones. The immediate physical relief that a substance or process provides is heavily favored over the abstract delayed benefits of sustained sobriety. Another useful concept is bounded self-control which describes the limits people have to resist temptations as stress, fatigue, and external pressures can wear down their decision to abstain.
At the same time, some really impactful treatment designs have come out of the emphasis on behavioral interventions. Behavioral Activation (BA) is one of the most effective ways to help people not just struggling with substance use disorders but depression as well, and it begins by guiding patients into making small but achievable steps towards establishing a positive reinforcement cycle from pleasurable and sober choices. Contingency Management (CM) is one of my favorite concepts for addressing addiction as it simply provides an immediate tangible reward for clean drug tests and participation in treatment, which appeals to the same bias for short-term rewards that substances provide.
Both BA and CM show either comparable or higher effectiveness to cognitive therapies that locate the sources of a patient’s distress within their worldview rather than the incentives in their actual world. In fact, some studies show that trying to combine Cognitive-Behavioral Therapy (CBT) with CM actually leads to worse outcomes, splitting the patient’s focus between cognitive self-assessments and the behavioral rewards that might change cognition. It helps to see CM as a competing economy or choice framework to a patient’s previous framework that made substance or process use seem compelling, which is especially helpful for people whose material problems cannot be reduced to cognitive distortions. “I won’t have enough money to afford food” is addressed immediately when a CM reward provides a grocery voucher while CBT negotiates it as “catastrophizing” or “future-tripping” that can be addressed with coping skills until things somehow work out.