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!

Lazaros Andronis’s journal round-up for 4th September 2017

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.

The effect of spending cuts on teen pregnancy. Journal of Health Economics [PubMed] Published July 2017

High teenage pregnancy rates are an important concern that features high in many countries’ social policy agendas. In the UK, a country which has one of the highest teen pregnancy rates in the world, efforts to tackle the issue have been spearheaded by the Teenage Pregnancy Strategy, an initiative aiming to halve under-18 pregnancy rates by offering access to sex education and contraception. However, the recent spending cuts have led to reductions in grants to local authorities, many of which have, in turn, limited or cut a number of teenage pregnancy-related programmes. This has led to vocal opposition by politicians and organisations, who argue that cuts jeopardise the reductions in teenage pregnancy rates seen in previous years. In this paper, Paton and Wright set out to examine whether this is the case; that is, whether cuts to Teenage Pregnancy Strategy-related services have had an impact on teenage pregnancy rates. To do so, the authors used panel data from 149 local authorities in England collected between 2009 and 2014. To capture changes in teenage pregnancy rates across local authorities over the specified period, the authors used a fixed effects model which assumed that under-18 conception rates are a function of annual expenditure on teenage pregnancy services per 13-17 year female in the local authority, and a set of other socioeconomic variables acting as controls. Area and year dummies were also included in the model to account for unobservable effects that relate to particular years and localities and a number of additional analysis were run to get around spurious correlations between expenditure and pregnancy rates. Overall, findings showed that areas which implemented bigger cuts to teenage pregnancy-targeting programmes have, on average, seen larger drops in teenage pregnancy rates. However, these drops are, in absolute terms, small (e.g. a 10% reduction in expenditure is associated with a 0.25% decrease in teenage conception rates). Various explanations can be put forward to interpret these findings, one of which is that cuts might have trimmed off superfluous or underperforming elements of the programme. If this is the case, Paton and Wright’s findings offer some support to arguments that spending cuts may not always be bad for the public.

Young adults’ experiences of neighbourhood smoking-related norms and practices: a qualitative study exploring place-based social inequalities in smoking. Social Science & Medicine [PubMed] Published September 2017

Smoking is a universal problem affecting millions of people around the world and Canada’s young adults are no exception. As in most countries, smoking prevalence and initiation is highest amongst young groups, which is bad news, as many people who start smoking at a young age continue to smoke throughout adulthood. Evidence suggests that there is a strong socioeconomic gradient in smoking, which can be seen in the fact that smoking prevalence is unequally distributed according to education and neighbourhood-level deprivation, being a greater problem in more deprived areas. This offers an opportunity for local-level interventions that may be more effective than national strategies. Though, to come up with such interventions, policy makers need to understand how neighbourhoods might shape, encourage or tolerate certain attitudes towards smoking. To understand this, Glenn and colleagues saw smoking as a practice that is closely related to local smoking norms and social structures, and sought to get young adult smokers’ views on how their neighbourhood affects their attitudes towards smoking. Within this context, the authors carried out a number of focus groups with young adult smokers who lived in four different neighbourhoods, during which they asked questions such as “do you think your neighbourhood might be encouraging or discouraging people to smoke?” Findings showed that some social norms, attitudes and practices were common among neighbourhoods of the same SES. Participants from low-SES neighbourhoods reported more tolerant and permissive local smoking norms, whereas in more affluent neighbourhoods, participants felt that smoking was more contained and regulated. While young smokers from high SES neighbourhoods expressed some degree of alignment and agency with local smoking norms and practices, smokers in low SES described smoking as inevitable in their neighbourhood. Of interest is how individuals living in different SES areas saw anti-smoking regulations: while young smokers in affluent areas advocate social responsibility (and downplay the role of regulations), their counterparts in poorer areas called for more protection and spoke in favour of greater government intervention and smoking restrictions. Glenn and colleagues’ findings serve to highlight the importance of context in designing public health measures, especially when such measures affect different groups in entirely different ways.

Cigarette taxes, smoking—and exercise? Health Economics [PubMed] Published August 2017

Evidence suggests that rises in cigarette taxes have a positive effect on smoking reduction and/or cessation. However, it is also plausible that the effect of tax hikes extends beyond smoking, to decisions about exercise. To explore whether this proposition is supported by empirical evidence, Conway and Niles put together a simple conceptual framework, which assumes that individuals aim to maximise the utility they get from exercise, smoking, health (or weight management) and other goods subject to market inputs (e.g. medical care, diet aids) and time and budget constraints. Much of the data for this analysis came from the Behavioral Risk Factor Surveillance System (BRFSS) in the US, which includes survey participants’ demographic characteristics (age, gender), as well as answers to questions about physical activities and exercise (e.g. intensity and time per week spent on activities) and smoking behaviour (e.g. current smoking status, number of cigarettes smoked per day). Survey data were subsequently combined with changes in cigarette taxes and other state-level variables. Conway and Niles’s results suggest that increased cigarette costs reduce both smoking and exercise, with the decline in exercise being more pronounced among heavy and regular smokers. However, the direction of the effect varied according to one’s age and smoking experience (e.g. higher cigarette cost increased physical activity among recent quitters), which highlights the need for caution in drawing conclusions about the exact mechanism that underpins this relationship. Encouraging smoking cessation and promoting physical exercise are important and desirable public health objectives, but, as Conway and Niles’s findings suggest, pursuing both of them at the same time may not always be plausible.

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Alastair Canaway’s journal round-up for 10th July 2017

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.

Use-of-time and health-related quality of life in 10- to 13-year-old children: not all screen time or physical activity minutes are the same. Quality of life Research [PubMedPublished 3rd July 2017

“If you watch too much TV, it’ll make your eyes square” – something I heard a lot as a child. This first paper explores whether this is true (sort of) by examining associations between aspects of time use and HRQL in children aged 10-13 (disclaimer: I peer reviewed it and was pleased to see them incorporate my views). This paper aims to examine how different types of time use are linked to HRQL. Time use was examined by the Multimedia Activity Recall for Children and Adolescents (MARCA) which separates out time into physical activity (sport, active transport, and play), screen time (TV, videogames, computer use), and sleep. The PedsQL was used to assess HRQL, whilst dual x-ray absorptiometry was used to accurately assess fatness. There were a couple of novel aspects to this study, first, the use of absorptiometry to accurately measure body fat percentage rather than the problematic BMI/skin folds in children; second, separating time out into specific components rather than just treating physical activity or screen time as homogeneous components. The primary findings were that for both genders, fatness (negative), sport (positive) and development stage (negative) were associated with HRQL. For boys, the most important other predictor of HRQL was videogames (negative) whilst predictors for girls included television (negative), active transport (negative) and household income (positive). With the exception of ‘active travel’ for girls, I don’t think any of these findings are particularly surprising. As with all cross-sectional studies of this nature, the authors give caution to the results: inability to demonstrate causality. Despite this, it opens the door for various possibilities for future research, and ideas for shaping future interventions in children this age.

Raise the bar, not the threshold value: meeting patient preferences for palliative and end-of-life care. PharmacoEconomics – Open Published 27th June 2017

Health care ≠ end of life care. Whilst health care seeks to maximise health, can the same be said for end of life care? Probably not. This June saw an editorial elaborating on this issue. Health is an important facet of end of life care. However, there are other substantial objects of value in this context e.g. preferences for place of care, preparedness, reducing family burdens etc. Evidence suggests that people at end of life can value these ‘other’ objects more than health status or life extension. Thus there is value beyond that captured by health. This is an issue for the QALY framework where health and length of life are the sole indicators of benefit. The editorial highlights that this is not people wishing for higher cost-per-QALY thresholds at end of life, instead, it is supporting the valuation of key elements of palliative care within the end of life context. It argues that palliative care interventions often are not amenable to integration with survival time in a QALY framework, this effectively implies that end of life care interventions should be evaluated in a separate framework to health care interventions altogether. The editorial discusses the ICECAP-Supportive Care Measure (designed for economic evaluation of end of life measures) as progress within this research context. An issue with this approach is that it doesn’t address allocative efficiency issues (and comparability) with ‘normal’ health care interventions. However, if end of life care is evaluated separately to regular healthcare, it will lead to better decisions within the EoL context. There is merit to this justification, after all, end of life care is often funded via third parties and arguments could, therefore, be made for adopting a separate framework. This, however, is a contentious area with lots of ongoing interest. For balance, it’s probably worth pointing out Chris’s (he did not ask me to put this in!) book chapter which debates many of these issues, specifically in relation to defining objects of value at end of life and whether the QALY should be altogether abandoned at EoL.

Investigating the relationship between costs and outcomes for English mental health providers: a bi-variate multi-level regression analysis. European Journal of Health Economics [PubMedPublished 24th June 2017

Payment systems that incentivise cost control and quality improvements are increasingly used. In England, until recently, mental health services have been funded via block contracts that do not necessarily incentivise cost control and payment has not been linked to outcomes. The National Tariff Payment System for reimbursement has now been introduced to mental health care. This paper harnesses the MHMDS (now called MHSDS) using multi-level bivariate regression to investigate whether it is possible to control costs without negatively affecting outcomes. It does this by examining the relationship between costs and outcomes for mental health providers. Due to the nature of the data, an appropriate instrumental variable was not available, and so it is important to note that the results do not imply causality. The primary results found that after controlling for key variables (demographics, need, social and treatment) there was a minuscule negative correlation between residual costs and outcomes with little evidence of a meaningful relationship. That is, the data suggest that outcome improvements could be made without incurring a lot more cost. This implies that cost-containment efforts by providers should not undermine outcome-improving efforts under the new payment systems. Something to bear in mind when interpreting the results is that there was a rather large list of limitations associated with the analysis, most notably that the analysis was conducted at a provider level. Although it’s continually improving, there still remain issues with the MHMDS data: poor diagnosis coding, missing outcome data, and poor quality of cost data. As somebody who is yet to use MHMDS data, but plans to in the future, this was a useful paper for generating ideas regarding what is possible and the associated limitations.

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