Agent relationships and information asymmetries in public health

The agent relationship and information asymmetry are two features of healthcare economics – but how do they apply to public health policy around processed foods?

Why is health different to other goods?

Arrow’s 1963 seminal paper helped lay the foundations for health economics as a discipline. The Nobel-winning economist talks about what makes healthcare different to other types of market goods. Two of the principal things are agent relationship – that a clinician often makes choices on behalf of a patient (Arrow calls them a “controlling agent”); and information asymmetry – that a clinician knows more than the patient (“informational inequality”). Whereas if someone is buying a new car, they make their own choices, and they might read up on the extensive information available so that they are reasonably knowledgeable about what to buy. These two factors have evolved and possibly diminished over time, especially among highly educated people in developed countries; people often have more choice over their treatment options, and some people have become ‘expert patients‘. Patients may no longer believe that the Götter in Weiß (Gods dressed in white) always know best.

Agent relationship and information asymmetry are features of healthcare economics but they also apply to public health economics. But where people accept clinicians as having more knowledge or acting as their agent, people don’t always accept advice on food from public health policy makers in the same way. People may think, “well I know how to buy a bottle of beer, or a can of coke, or a pizza”, and may not see any potential information asymmetry. Some of it might be ‘akrasia’ – they know that food is unhealthy, but they eat it anyway because it is delicious! However, few people may be aware that poor diet and obesity are the biggest risk factors for ill health and mortality in England.

People might ask “why should a nanny state agent make my food or drink decisions for me?” Of course, this is ignoring the fact that processed food companies might be making those decisions, and reinforcing them using huge marketing budgets. Consumers see government influences but they don’t always see the other information asymmetry and agent relationship; the latent power structures that drive their behaviours – from the food, drinks, alcohol industry, etc. Unsustainable food systems that promote obesity and poor health might be an example of market failure or a tragedy of the commons. The English food system has not moved on enough from post-world war 2 rationing, where food security was the major concern; it still has an objective to maximise calorie supply across the population, rather than maximise population health.

Some of the big UK misselling scandals like mortgage PPI are asymmetries. You could argue that processed foods (junk food high in salt, sugar and saturated fats) might be missold because producers try to misrepresent the true mix of ingredients – for example, many advertisements for processed foods try to misrepresent their products by showing lots of fresh fruit and vegetables. Even though processed foods might have ingredients listed, people have an information asymmetry (or at least, a deficit around information processing) around truly understanding the amount of hidden salt and sugars, because they may assume that the preparation process is similar to a familiar home cooked method. In the US there have been several lawsuits from consumers alleging that companies have misled them by promoting products as being wholesome and natural when they are in fact loaded with added sugars.

The agent relationship and information asymmetry as applied to food policy and health.

How acceptable are public health policies?

A 2012 UK poll carried out by YouGov, funded by the Adam Smith Institute (a right wing free market think tank), found that 22% of people in England thought that the government should tell people what to eat and drink, and 44% thought the government should not. Does this indicate a lack of respect for public health as a specialism? But telling people what to eat and drink is not the same as enacting structural policies to improve foods. Research has shown that interventions like reducing salt in processed foods in the UK or added sugar labelling in the US could be very cost effective. There has been some progress with US and UK programmes like the sugary drinks industry levy, which now has a good level of public support. But voluntary initiatives like the UK sugar reduction programme have been less effective, which may be because they are weakly enforced, and not ambitious enough.

A recent UK study used another YouGov survey to assess the public acceptability of behavioural ‘nudge’ interventions around tobacco, alcohol, and high-calorie snack foods. It compared four types of nudges: labelling (adding graphic warning labels to products); size (reducing pack size of snacks, serving size for alcohol, and number of cigarettes in packets for tobacco); tax (increasing the price to consumers); and availability (banning sales from corner shops). This study found that labelling was the most acceptable policy, then size, tax, and availability. It found that targeting tobacco use was more acceptable than targeting alcohol or food. Acceptability was lower in people who participated in the relevant behaviour regularly, i.e. smokers, heavy drinkers, frequent snackers.

What should public health experts do?

Perhaps public health experts need to do more to enhance their reputation with the public. But when they are competing with a partnership between right wing think tanks, the media and politicians, all funded by big food, tobacco and alcohol, it is difficult for public health experts to get their message out. Perhaps it falls to celebrities and TV chefs like Jamie Oliver and Hugh Fearnley-Whittingstall to push for healthy (and often more sustainable) food policy, or fiscal measures to internalise the externalities around unhealthy foods. The food industry falls back on saying that obesity is complex, exercise is important as well as diet, and more research is needed. They are right that obesity is complex, but there is enough evidence to act. There is good evidence for an ‘equity effectiveness hierarchy‘ where policy-level interventions are more effective at a population level, and more likely to reduce inequalities between rich and poor, than individual, agentic interventions. This means that individual education and promoting exercise may not be as effective as national policy interventions around food.

The answer to these issues may be in doing more to reduce information asymmetries by educating the public about what is in processed food, starting with schools. At the same time understanding that industries are not benevolent; they have an agent relationship in deciding what is in the foods that arrive at our tables, and the main objectives for their shareholders are that food is cheap, palatable, and with a long shelf life. Healthy comes lower on the list of priorities. Government action is needed to set standards for foods or make unhealthy foods more expensive and harder to buy on impulse, and restrict marketing, as previously done with other harmful commodities such as tobacco.

In conclusion, there are hidden agent relationships and information asymmetries around public health policies, for instance around healthy food and drinks. Public health can potentially learn from economic instruments that have been used in other industries to mitigate information asymmetries and agent relationships. If Government and the food industry had shared incentives to create a healthier population then good things might happen. I would be curious to know what others think about this!

Alastair Canaway’s journal round-up for 31st October 2016

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Ethical hurdles in the prioritization of oncology care. Applied Health Economics and Health Policy [PubMedPublished 21st October 2016

Recently between health economists, there has been significant scrutiny and disquiet directed towards the Cancer Drugs Fund with Professor Karl Claxton describing it as “an appalling, unfair use of NHS resources”. With the latest reorganization of the Cancer Drugs Fund in mind, this article examining the ethical issues surrounding prioritisation of cancer care was of particular interest. As all health economists will tell you, there is an opportunity cost with any allocation of scarce resources. Likewise, with prioritisation of specific disease groups, there may be equity issues with specific patients’ lives essentially being valued more greatly than those suffering other conditions. This article conducts a systematic review of the oncology literature to examine the ethical issues surrounding inequity in healthcare. The review found that public and political attention often focuses on ‘availability’ of pharmacological treatment in addition to factors that lead to good outcomes. The public and political focus on availability can have perverse consequences as highlighted by the Cancer Drugs Fund: resources are diverted towards availability and away from other more cost-effective areas, and in turn this may have had a detrimental effect on care for non-cancer patients. Additionally, by approving high cost, less cost-effective agents, strain will be placed upon health budgets and causing problems for existing cost-effectiveness thresholds. If prioritisation for cancer drugs is to be pursued then the authors suggest that the question of how to fund new therapies equitably will need to be addressed. Although the above issues will not be new to most, the paper is still worth reading as it: i) gives an overview of the different prioritisation frameworks used across Europe, ii) provides several suggestions for how, if prioritization is to be pursued, it can be done in a fairer manner rather than simply overriding typical HTA decision processes, iii) considers the potential legal consequences of prioritisation and iv) the impact of prioritisation on the sustainability of healthcare funding.

Doctor-patient differences in risk and time preferences: a field experiment. Journal of Health Economics Published 19th October 2016

The patient-doctor agency interaction, and associated issues due to asymmetrical information is something that was discussed often during my health economics MSc, but rarely during my day to day work. Despite being very familiar with supplier induced demand, differences in risk and time preferences in the patient-doctor dyad wasn’t something I’d considered in recent times. Upon reading, immediately, it is clear that if risk and time preferences do differ, then what is seen as the optimal treatment for the patient may be very different to that of the doctor. This may lead to poorer adherence to treatments and worse outcomes. This paper sought to investigate whether patients and their doctors had similar time and risk preferences using a framed field experiment with 300 patients and 67 doctors in Athens, Greece in a natural clinical setting. The authors claim to be the first to attempt this, and have three main findings: i) there were significant time preference differences between the patients and doctors – doctors discounted future health gains and financial outcomes less heavily than patients; ii) there were no significant differences in risk preferences for health with both doctors and patients being mildly risk averse; iii) there were however risk preference differences for financial impacts with doctors being more risk averse than patients. The implication of this paper is that there is potential for improvements in doctor-patient communication for treatments, and as agents for patients, doctors should attempts to gauge their patient’s preferences and attitudes before recommending treatment. For those who heavily discount the future it may be preferable to provide care that increases the short term benefits.

Hospital productivity growth in the English NHS 2008/09 to 2013/14 [PDF]. Centre for Health Economics Research Paper [RePEcPublished 21st October 2016

Although this is technically a ‘journal round-up’, this week I’ve chosen to include the latest CHE report as I think it is something which may be of wider interest to the AHEBlog community. Given limited resources, there is an unerring call for both productivity and efficiency gains within the NHS. The CHE report examines the extent to which NHS hospitals have improved productivity: have they made better use of their resources by increasing the number of patients they treat and the services they deliver for the same or fewer inputs. To assess productivity, the report uses established methods: Total Factor Productivity (TFP) which is the ratio of all outputs to all inputs. Growth in TFP is seen as being key to improving patient care with limited resources. The primary report finding was that TFP growth at the trust level exhibits ‘extraordinary volatility’. For example one year there maybe TFP growth followed by negative growth the next year, and then positive growth. The authors assert that much of the TFP growth measured is in fact implausible, and much of the changes are driven largely by nominal effects alongside some real changes. These nominal effects may be data entry errors or changes in accounting practices and data recording processes which results in changes to the timing of the recording of outputs and inputs. This is an important finding for research assessing productivity growth within the NHS. The TFP approach is an established methodology, yet as this research demonstrates, such methods do not provide credible measures of productivity at the hospital level. If hospital level productivity growth is to be measured credibly, then a new methodology will be required.

Credits

Chris Sampson’s journal round-up for 11th July 2016

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

GPs’ implicit prioritization through clinical choices – evidence from three national health services. Journal of Health Economics [RePEcPublished 7th July 2016

Through economic evaluation we inform high-level prioritisation decisions about (for example) which drugs should and should not be available. Meanwhile, GPs are able to prioritise at the individual level through their prescribing behaviour. But do they prioritise? And in what ways? This study reports on a discrete choice experiment carried out with 907 GPs in England, Scotland and Norway to try and elicit prescription behaviour in different decision making contexts. A key aspect that the study considers is the presence of a double agency problem, whereby the GP advocates both maximum patient benefit (‘patient agency’) and cost containment for society (‘social agency’). GPs were asked a generic question about prescribing either ‘Medicine A’ or ‘Medicine B’ and the DCE included 5 attributes: total costs, effect, patient costs, patient preference and physician’s experience. All else equal, GPs in all countries preferred lower total costs. There was variation both within and between countries in the extent to which GPs were willing to accept high societal costs for greater patient benefit. GPs in England seem to exhibit stronger social agency in that they were less willing to accept high costs than GPs in both Norway and Scotland. However, in regard to patient costs and patient preferences, UK GPs were willing to accept greater societal costs. The authors discuss a variety of possible reasons for these findings but suggest that strong governance reinforces social agency, while cultural aspects moderate the effect.

Unrelated future costs and unrelated future benefits: reflections on NICE Guide to the Methods of Technology Appraisal. Health Economics [PubMed] Published 3rd July 2016

NICE would prefer that we disregard UFC. That’s unrelated future costs (not Ultimate Fighting Championship) – for example, the costs of dementia care having prevented death from a heart attack. But the availability of these unrelated treatments will likely confer benefit that is not excluded from the analysis. So it’s easy to see how we could end up with suboptimal allocations of resources. In this editorial, the authors consider the arguments against the inclusion of unrelated future costs, which can be broadly considered as relating to ‘principles’, ‘practicalities’ and ‘implications’. The authors argue that current approaches in principle are no more acceptable than the inclusion of costs and exclusion of benefits, as both are inconsistent in their handling of future payoffs. Practically, the authors argue that it is simpler to incorporate projected future costs than to tease out future benefits. Some have argued that the implications are limited, but the authors highlight that issues such as the level of comorbidity could have a major impact. There’s a lot of research still to be done in this area, but for now we should at least strive for consistency in our handling of future costs and benefits.

The capability approach: a critical review of its application in health economics. Value in Health Published 29th June 2016

Friends know I’ve been guilty of a bit of ICECAP-bashing in the past. Though I like the capability approach in principle, I am not a fan of how it has been applied in health economics. Naturally, I was drawn to this “critical” review. In fact, it was published as a working paper just before I finished writing my chapter for Jeff’s book but I didn’t have time to read it let alone incorporate its findings. So here we are with the real (published) deal. The primary purpose of the review is to evaluate the extent to which current questionnaires (e.g. ICECAP) can actually capture capabilities. The article does an excellent job of concisely identifying fundamental problems in the use of current measures. One issue is that the use of terms like “able to” does not allow for trade-offs between domains. A person may have maximum capability in all domains, but not be able to achieve maximal functionings in all of them simultaneously. As such, unachievable capability sets could be defined. Another problem is that these measures do not capture all of the possible combinations of functionings, only the dominant one. Therefore, these measures fail to capture the key basis for the capability approach – the value in choice. We haven’t yet figured out how to properly value a set, rather than a single combination. The authors suggest a way forward, based on the estimation of ‘approximate capability’. This could identify dominant functionings and the degree of choice. A key benefit of this approach would be the conceptual clarity for which it allows. As I have argued, I think this is the main failure of the application of the capability approach (and indeed health state valuation more broadly) in health economics.

Clinical guidelines: a NICE way to introduce cost-effectiveness considerations? Value in Health Published 28th June 2016

Most UK health economists will be familiar with NICE clinical guidelines. They outline what should (and should not) be taking place as part of care pathways in the NHS. The production of guidelines isn’t (usually) triggered by any new intervention but rather they are designed to improve current standard of care. The recommendations take into account economic considerations. This article outlines some of the advantages of the NICE guidelines programme and describes the role of health economists. One advantage of the guideline development process is that it is a joint enterprise between NICE and the various royal colleges of medicine. But there is also tension in this relationship from an economics perspective as optimal individual patient care may be at odds with broader societal objectives (if you’ve skipped ahead, see the first article summarised above). This article identifies a key advantage of NICE guidelines as being able to make recommendations on disinvestment. A key potential that I see, which isn’t discussed here, is for whole disease modelling studies to be routinely funded as part of the guideline development process.

Photo credit: Antony Theobald (CC BY-NC-ND 2.0)