A Behavioral Economics Primer

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A Behavioral Economics Primer Gregory J. Madden Universityof Wisconsin-Eau Claire

This chapter is designed to selVe as an introduction to the major concepts, measures, and methods of behavioral economics. As such, the target audience is composed of readers who are relatively unfamiliar with behavioral economics. For this subset of readers, this chapter allows a better understanding of the remainder of the book. This chapter also is intended for those readers who are somewhat familiar with the behavioral economics literature but have yet to see the utility of the analyses. This chapter contains several examples illustrating the practical relevance of behavioral economics. This chapter glosses over the quantitative complexities of behavioral economics, focusing instead on an ovelView of some of the more important findings and concepts emanating from this literature. Readers J'ith greater experience in behavioral economics or who are interested in the quantitative details of behavioral economics can safely proceed to Hursh (chap. 2, this volume), which examines these more advanced concepts. This chapter begins with a brief history of the origin and development of behavioral economics within behavioral psychology (behavior analysis) and experimental economics. From these roots, we can begin to define the field of behavioral economics, recognizing its evolving status. In the sections that follow, two measures of consumer behavior frequently examined in behavioral economic experiments (consumption and spending) are outlined, followed by an ovelView of some of the important economic variables known to affect consumer behavior (price, alternative sources of reinforcement, discounting delayed consequences, and income). Throughout these sections,

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ings and subsequent conceptual analyses that would help us to better understand clinically relevant behavior, such as substance abuse. The beginning of the 1980s saw the publication of two important articles in behavioral economics. In the first, Hursh (1980) argued more completely that animal experiments were modeling components of the economic contexts in which human behavior typically occurs and that conceptual and quantitative analyses of behavior that failed to integrate economic concepts would be too simplistic to yield accurate and meaningful predictions of human behavior. In the second article, Kagel and Battalio (1980) illustrated that several components of economic theory (e.g.,. downward-sloping demand curves) proved accurate in predicting the behavior of animal subjects under appropriate economic conditions. Together, these articles laid the empirical and conceptual groundwork for subsequent work in behavioral economics. For example, in the years that followed, topics as varied as labor supply (e.g., Green, Kagel, & Battalio, 1982; Hursh & Natelson, 1981) and choice involving delayed or uncertain outcomes (e.g., Battalio, Kagel & MacDonald, 1985; Mazur, 1987) were investigated in the behavioral economics laboratory with animal subjects (see also Green & Kagel, 1987). Application of behavioral economic concepts to human behavior, in general, and substance abuse, specifically, was argued for cogently by Vuchinich and Tucker (1988). Specifically, these authors used quantitative models of choice (e.g., Herrnstein, 1970) to show that when the price (broadly defined) of an array of nonalcohol reinforcers increased (e.g., when access to a social support network becomes constrained), behavior would be increasingly allocated to alcohol-related reinforcers (whose price remains unchanged). Vuchinich and Tucker's conceptual analysis would be followed by laboratory research demonstrating that, indeed, when nondrug reinforcers are plentiful (Le., available at a low price), initiation of drug use, drug dependence, and relapse to drug use are far less likely than when these alternative reinforcers are either unavailable or significantly constrained (see Carroll, 1987, for a summary of this research). Vuchinich and Tucker's analysis was instrumental in expanding behavioral economics into the laboratory study of human drug dependence (e.g., Bickel, DeGrandpre, Higgins, & Hughes, 1990; Bickel, DeGrandpre, Hughes, & Higgins, 1991) and continued behavioral economic conceptual analyses of problems of drug dependence (Bickel, DeGrandpre, & Higgins, 1993; Hursh, 1991). This volume speaks to the continued expansion of behavioral economics into the socially important arena of health-related behaviors.

behavioral economic methods, principles, concepts, and measures are introduced and their relevance to a more thorough understanding of health behaviors is discussed.

A BRIEF mSTORY OF THE DEVELOPMENT OFMODERNBEHA~ORALECONOMICS The term behavioral economics, as it is used throughout this book, was apparently first coined by Kagel and Winkler (1972) in an article published in the journal of Applied Behavior Analysis. According to these authors, behavioral economics referred to the area of economic research concerned with predicting and controlling human behavior, a task that had been identified explicitly by Skinner (1956) as the goal of the experimental analysis of behavior (i.e., behavior analysis). The behavioral economic research summarized by Kagel and Winkler primarily was composed of large-scale mathematical-statistical analyses and models used to predict the behavior of large populations interacting with the natural economy. These models were largely based on untested economic axioms (Kagel & Winkler, 1972) and, as it turned out, these models yielded few predictions that performed better than chance ("Economists Play the Numbers Game," 1971; Leontief, 1971). Given these shortcomings of economic approaches to human behavior, Kagel and Winkler argued for a synthesis of economic principles with procedures and preparations pioneered within the experimental analysis of behavior (e.g., token-economic systems, use of animal subjects, and use of schedules of reinforcement). This synthesis, they argued, may yield better predictive models of human behavior and better technologies with which to control economic systems. Shortly after the publication of the Kagel and Winkler (1972) article, empirical work representing their "synthesis" began to appear in the published literature (e.g., Battalio et aI., 1973a, 1973b; Hursh, 1978; Kagel et aI., 1975; Kagel, Battalio, Winkler, & Fisher, 1977). Hursh (1978), for example, presented an empirical argument that animal subjects working for food and water in "Skinner boxes" provided a useful model of behavior affected by economic variables. The behavior of the monkeys in Hursh's experiments, f?r example, was affected by the price at which each commodity could be obtained (i.e., the number of responses the monkeys were required to make in order to earn a fixed amount of food or water), and this effect was altered by the availability of free feedings occurring between sessions. By the end of the 1970s, behavioral economic researchers were using animal and human laboratories to observe directly the interplay between economic variables, such as price and alternative sources of reinforcement, on the behavior of individuals. The results of these early experiments laid the foundation for subsequent research illustrating the generality of behavioral economic find-

Given the evolving and expanding nature of behavioral economics, it is difficult to provide a concise definition of the field to which all behavioral economists would subscribe. At a minimum, behavioral economics is the study of variables (primarily economic, but noneconomic as well) affecting the behavior of consumers. More specifically, behavioral economics is the

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of that disorder using economic principles and knowledge about economic variables known to affect consumer demand.

combination of microeconomic concepts, principles, and measures along with concepts, principles, and experimental methods developed by behavior analysts (e.g., focus on the behavior of individual subjects and extensive use of animal subjects). Together, these techniques and principles are employed to gain a more complete understanding of the interaction between behavior and the economic context in which it occurs. Before moving on to an overview of the measures of consumer. behavior employed within behavioral economic research, a note about technical vocabulary. Economists speak of goods and services, whereas psychologists speak of reinforcers. The economist's good refers to tangible possessions or merchandise, and service refers to labor supplied by another. Some of these goods and services will motivate the consumer to work in order to earn them; others will not. Within behavior analysis, those goods and services that do motivate behavior (I.e., those consequences that increase the future probability of the behavior or behaviors that led to their delivery) are referred to as reinforcers. Because behavioral economists are interested in those consequencesthat affect individual behavior, I use the term reinforcer throughout this chapter. MEASURES OF CONSUMER

Spending (Response Output) A second important measure of consumer behavior is spending, which may be defined broadly as the amount of money, work, or time that an individual will allocate toward obtaining a particular reinforcer. Tracking treatmentproduced changes in spending (as previously defined) may be important in assessing the efficacy of treatments for psychiatric disorders such as gambling or obsessive-compulsive disorders. The amount of time, effort, and money spent in drug-seeking, drug-related, and non drug-related activities is also an important component to monitor and target for change in a substance-' abuse treatment program. Several researchers have demonstrated reductions in substance use and abuse when a central component of treatment is patient participation in enjoyable nondrug-related activities that compete with drugrelated activities (e.g., Higgins et aL, 1993). Other researchers (e.g.., Carroll, 1996) demonstrated under laboratory conditions that allowing animals to allocate their time and effort to alternative reinforcing activities (e.g., working to obtain a sweetened liquid) can effectively compete with drug reinforcers. Together, this evidence suggests that activities that compete with drug use may be important in the successful treatment of substance abuse (and perhaps other disorders as well), and, thus, monitoring these components of spending may be important in treating and assessing the efficacy of treating these disorders. Although the examples discussed thus far suggest a direct relation between consumption and spending, this is not always the case. Increasing the price of a gallon of gasoline, for example, is likely to produce a modest decrease in per capita gasoline consumption, modest because most drivers have limited nonessential automobile trips that they could cut from their daily activities. While gasoline consumption is declining, per capita spending on gasoline likely will increase in an effort to maintain consumption at a level approximating that consumed before the price increase. Because consumption and spending are sometimes affected in opposite ways by changing economic variables, measures of both consumption and spending are important to obtain a complete picture of a consumer's reaction to these changes.

BEHAVIOR

consumption The first primary measure of consumer behavior within behavioral economics is consumption. Consumption may be defined broadly to include a variety of activities, such as eating, drinking, using the services of another, or using light or durable goods. Consumption is a particularly appropriate measure of several problem behaviors commonly seen in clinical populations. For example, drug consumption over time is an important measure of the success of a drug- or alcohol-abuse treatment program or a program designed to produce smoking cessation. Likewise, measures of caloric or fat consumption or medication compliance are important measures in the treatment of obesity or in the treatment of patients at risk for a number of health deficits (e.g., heart attack, stroke, high blood pressure, etc.). Other medical or psychiatric disor.ders with important consumption components that require monitoring include feeding disorders in infants, pica, and kleptomania. The interested reader will find behavioral economic analyses of factors affecting cigarette smoking and eating disorders in chapters of this book (see chap. 10 and 11, respectively). Within behavioral economics, consumption of any reinforcer (be it an item that benefits or damages the organism) is conceptualized as an instance of consumer demand for that reinforcer (for purposes here, demand may be viewed as synonymous with consumption). Conceptualizing psychiatric disorders as consumer demand for a particular reinforcer allows an analysis

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Price Effects on Consumption. When we think of economic variables that affect our decisions to purchase and eventually consume a reinforcer, we immediately think of price. If the price of broiled lobster and melted butter

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were lower most people would probably eat more of it (cholesterol be damned). If Mercedes-Benz would substantially lower the price of its line of luxury automobiles, we would all probably increase our level of consumption (above zero). At the time of this writing, the U.S. Congress is debating imposing a larger tax on the price of a pack of cigarettes, with the belief that this will decrease per capita cigarette consumption, especially in teenage smokers (see Chaloupka & Wechsler, 1995). These observations regarding the effects of a price change on consumption have been formalized in the economic demand law. The demand law states that, all else being equal, consumption of a reinforcer will decrease as its price is increased. Examples of this law abound in the natural human economy. Lea (1978) reported on the effects of increases in the price of a number of different consumer products (e.g., tea, aspirin, and pork sausages). With very few exceptions, as the price of these reinforcers increased, per capita consumption of these products decreased. These examples illustrate predictions of the demand law in the large populations that are typically the subject of economic analyses (Le., all tea drinkers and sausage eaters), but does the demand law also describe individual consumers' reactions to price increases? Although there are individual differences in the extent to which price increases decrease consumption, laboratory experiments with individual participants support the demand law. In these experiments, price is usually defined in terms of the number of discrete responses that must be emitted in order to obtain one unit of the reinforcer. This ratio of responses emitted per reinforcer consumed defines the reinforcer's unit price.! Several early experiments demonstrated that increasing the unit price at which food could be obtained decreased individual animal subjects' daily food intake (e.g., Collier, Hirsch, & Hamlin, 1972). More recently, several studies have found that individual human participants' cigarette (Bickel & Madden, in press) and coffee (Bickel, Hughes, DeGrandpre, Higgins, & Rizzuto, 1992) consumption decreased when the unit prices of these reinforcers were increased. Thus, consumption of three reinforcers that many would find difficult to do without (food, coffee, and cigarettes) decreases in the face of unit price increases.

'When considering the effects of price on consumption, it is important to measure price as unit price (i.e., spending or response-output divided by the reinforcer amount). Doubling the price of a pack of cigarettes is likely to have little effect on smoking if the number of cigarettes sold per pack is also doubled, because the unit price is unaffected by the price increase. Because unit price is, in essence, a cost-benefit ratio, unit price may be increased either by increasing costs associated with the reinforcer (e.g., increasing the amount of work required to earn the reinforcer) or by decreasing the benefits of the reinforcer (e.g., decreasing the magnitude of the reinforcer).

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Elasticity of Demand: Sensitivity of Consumption to Price Changes. For any individual consumer, consumption of some reinforcers may be highly sensitive to price changes, whereas consumption of others may be relatively insensitive to these changes. For example, if the prices of imported chocolate and heating fuel (e.g., heating oil, natural gas, etc.) were to double, it is a safe bet that most people who consume both products would cut back on their chocolate consumption more than on their use of heating fuel. The extent to which price increases produce decreases in consumption is referred to as price elasticity of demand. Demand for a reinforcer is defined as elastic if a 1% change in price produces greater than a l%.change in consumption. Conversely, when demand for a reinforcer is inelastic, a 1% price change produces less than a 1% change in consumption. The discussion of price increases thus far has been limited to a single increase from Price A to Price B.' A complete understanding of the effects of price changes on consumption, however, requires that we examine a price range like that shown in Fig. 1.1 (note the logarithmic coordinates). The function in the left panel of Fig. 1.1 illustrates the typical effects of price increases on consumption and is referred to as a demand curve. The data shown here were derived from 74 cigarette smokers who participated in 17 experiments conducted by Bickel and his colleagues (Bickel & Madden, in press). In these studies, smokers earned cigarette puffs during 3-hr sessions by making an effortful response (i.e., pulling a plunger). Unit price was

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FIG. 1.1. The left panel illustrates the relation between cigarette puffs smoked in a three-hour session and the unit price at which cigarette puffs could be obtained in that session. The right panel shows the effects of unit price on the number of responses made during the session in order to earn cigarette puffs. The vertical line in each panel separates the elastic and inelastic portions of the demand and response-output curves. From Tbe Economic Analysis of Substance Useand Abuse: An Integration of Economic and Behavioral Economic Research, edited by F. ]. Chaloupka, W. K. Bickel, M. Grossman, and H. Saffer, in press, Chicago, IL: University of Chicago Press. Copyright @ by University of Chicago Press. Reprinted with permission.

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manipulated by either changing the number of pulls required per puff or the number of puffs per work requirement completed. The fact that these data were collected with cigarette smokers working for puffs is relatively unimportant; similar curves could have been given for human demand for a variety of food products (Lea, 1978); or animal subjects' demand for food, water, or electrical brain stimulation (Hursh, 1980). What is important is that as unit price increases, cigarette smoking decreases along a positively decelerating demand curve. At unit price 10 (i.e., 10 responses per puff), smokers consumed an average of 30 puffs per session. However, when each puff cost 1,600 pulls, consumption fell to about two puffs in 3 hr. The next thing to notice is that up until about unit price 750, demand for cigarettes is inelastic. This may be deduced by examining the slope of the demand curve. When consumption is plotted on double logarithmic coordinates, the slope of the demand curve provides a quantitative measure of elasticity. Demand is considered inelastic when slope is greater than -1 (see Fig. 1.1). At unit price 750, the slope of the demand curve is equal to -1, indicating unit elasticity (i.e., consumption changes proportionally with price changes). As is evident, unit elasticity does not last long. The final effect illustrated in the left panel of Fig. 1.1 occurs as prices increase above 750. Here, the slope of the demand curve becomes more negative with subsequent price increases. When slope is less than -1, demand is elastic, indicating that a 1% price increase yields greater than a 1% decrease in consumption. As you have probably already deduced, consumption and spending (response output) are, under many conditions, intimately linked. That is, the more money you spend, or the more work you allocate toward earning reinforcers, the more you may consume. Therefore, to consider the treatment implications of price manipulations properly requires that we first examine the effects of price on spending. Price Effects on Spending. Let us return to the previous examples in which the price of imported chocolate and heating fuel simultaneously doubled. Imagine that chocolate costs $3 per ounce before the price increase, and the consumer spent $15 per month on 5 ounces. After the price increase (up to $6 per ounce), consumption fell to 1 ounce per month, and the monthly expenditure for imported chocolate decreased to $6. Thus, the price increase simultaneously decreased spending and consumption. As we have seen already, there is not always a direct relation between price effects on consumption and spending. For example, imagine that the price of heating fuel increases from 50 cents to $1 per gallon, and the same hypothetical consumer adjusts the thermostat a few degrees lower and decreases fuel consumption by 5%. In order to maintain this reduced level of consumption, the consumer will have to pay about 90% more per month in heating bills. So, in this case, the price increase decreased consumption and simultaneously increased spending.

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These examples illustrate an important feature of elastic and inelastic demand. When demand for a good is elastic (e.g., imported chocolate), a price increase decreases both consumption and spending. When demand for a good is inelastic (e.g., heating fuel), however, price increases decrease consumption and increase the amount of money, effort, or both allocated toward obtaining the good. The relation between elastic and inelastic demand for a reinforcer and spending are illustrated in the right panel of Fig. 1.1. Just like the demand curve in the left panel, the supply curve in the right panel of Fig. 1.1 illustrates the effects of a range of unit prices (i.e., the number of responses required per cigarette puff) on spending (i.e., the amount of labor supplied). Across the range of unit price increases where demand is inelastic, consumption is decreasing (left panel), but spending is increasing (right panel). Thus, across this range of prices, the consumer's reaction to a price increase is to increase expenditures in an attempt to defend a prior level of consumption. Across the elastic portion of the demand curve, however, price increases decrease both consumption and expenditures.

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Treatment Implications of Price and Price Elasticity of Demand. Knowledge about the effects of price manipulations and the price elasticity of demand for a particular reinforcer may have important treatment implications. Consider the effects of an increase in. the price of heroin if it is currently available at a unit price of 10, as shown in Fig. 1.1. At this price, consumption is relatively unconstrained; therefore, small amounts of spending (i.e., drug-seeking activities) yield large amounts of heroin consumption. Because demand for heroin at this price is inelastic, law-enforcement efforts that moderately increase the price of heroin (e.g., supply reduction) are likely to yield two results. First, we should see a reduction in heroin consumption that is proportionally smaller than the price increase and, second, we should see an increase in drug-seeking activities (e.g., burglary and muggings) in an attempt to defend prior amounts of heroin consumption (Bickel & DeGrandpre, 1995; Hursh, 1991). At the same time, as the unit price of heroin increases, greater profits are now available to those willing to take the risk of selling heroin. According to labor supply theory, an unintentioned effect of such drug-interdiction initiatives is to increase the number of individuals who choose to make a living as a drug dealer (Hursh, 1991). If these increases in drug-seeking and drug-selling are more costly to the society than slightly higher levels of heroin consumption, then the merits of this intervention are questionable. If, on the other hand, the current price bf heroin were 1,000, as shown in Fig. 1.1, a price increase would decrease both consumption and drugseeking activities. If spending and consumption are declining, the number of drug dealers who can be economically supported is reduced. Note, however, that these predicted effects of a price increase occur only when the

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price change occurs in the elastic portion of the demand curve. In Fig. 1.1, this portion of the demand curve falls in the unit price range to the right of the vertical line. Behavioral economists have termed this price at which demand shifts from inelastic to elastic as Pm,.. In an optimal economic environment, the price of heroin would be greater than Pmm such that supply-side law-enforcement efforts to increase the street price of heroin would decrease both consumption and spending. Realistically, however, demand for drugs, like heroin, tends to fall along the inelastic portion of the demand curve, and increasing street prices of these drugs toward the elastic portion of the curve is frequently impractical. Behavioral economists are interested in identifying variables that affect price elasticity of demand. If we better understood how to make demand for problematic reinforcers more elastic, then we would render demand more sensitive to the host of variables that can affect the price of these reinforcers. Likewise, if we could make demand for beneficial reinforcers (e.g., fruits and vegetables, whole grains, exercise, attending alcoholic support group meetings, etc.) more inelastic, then we could make their consumption less sensitive to disruption by price fluctuations. For example, if demand for attending a weekly Alcoholics Anonymous meeting were made more inelastic, then the participant is more likely to drive an additional distance if the meeting is temporarily moved (an increase in the cost of attending a meeting) and may thereby be less likely to relapse to alcohol use. Alternative Sources

of Reinforcement

The previous discussion of price effects on consumption and spending presents a picture of consumer behavior as though behavior were controlled by only a single reinforcer, and the price of that reinforcer exclusively determines consumption and spending patterns. What this analysis thus far has omitted is an explicit recognition that behavior occurs in a context in which multiple sources of reinforcement are concurrently available (Herrnstein, 1970). That is, if you continue to read this chapter, there must be some reinforcing consequences for doing so, and at this moment they apparently outweigh a number of alternative reinforcers that are concurrently available (e.g., those reinforcers that maintain going for a walk, talking to a colleague, or taking a nap). As this analysis suggests, some types of concurrently available reinforcers compete for the resources of the individual (e.g., time and labor). The reinforcing consequences that maintain television watching, for example, compete for an individual's time with a host of other reinforcers, some of which maintain behaviors beneficial to the individual (e.g., the reinforcing consequences of exercising) or beneficial to the society (e.g., the gratitude of others that helps to maintain voluntary public service activities). However, not all concurrently available reinforcers are in competition with one another; some are independent of one another, and other

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reinforcers tend to be purchased and consumed together. The sections that follow examine these three different types of alternative sources of reinforcement: substitutes, independents, and complements. Substitutes. Within economics, reinforcers that share important structural or functional properties are termed substitutes. Most readers already will be familiar with some economic substitutes. For example, artificial sweeteners (e.g., saccharine or Aspartame) compete for the money consumers spend on sugar products. Likewise, nicotine replacement products (e.g., nicotine gum or patch) are designed to substitute for the nicotine obtained by smoking tobacco. Generally speaking, if a new source of reinforcement is introduced (e.g., saccharin is introduced to the market), and consumption of and the resources allocated to obtaining the old reinforcer are reduced (e.g., consumption of and money spent on sugar decline), then we may classify the new reinforcer as a substitute for the old. Alternatively, if two reinforcers are concurrently available (e.g., both sugar and saccharine have been on the market for some time), and the price of one increases (the price of sugar doubles), then if we observe an increase in consumption of and resources allocated to obtaining the other reinforcer (saccharine), then we again can classify the latter as a substitute for the reinforcer whose price increased. Petry and Bickel (1998) demonstrated that some drugs of abuse can substitute for one another. In their study, heroin addicts were given $30 with which to make hypothetical choices about which of several drugs they would purchase on a given day. In one condition, the price of heroin was increased while the price of several other drugs was unchanged. This represents a test to determine if the other drugs could substitute for heroin. The left panel of Fig. 1.2 shows that increasing the price of heroin decreased heroin consumption (as predicted by the demand law) and increased valium consumption, thereby establishing valium as a substitute for heroin. There is a good deal of variability in the extent to which a reinforcer that is classified as a substitute can compete for the time and resources of the consumer. Obviously, if two reinforcers are identical (e.g., heroin vs. heroin), then the two reinforcers will, all else being equal, function as perfect substitutes. Accordingly, if two drug dealers sell heroin of identical quality at different prices, addicts are likely to purchase heroin exclusively from the dealer offering it at a lower price. Some reinforcers, however, may only partially substitute for another reinforcer. For example, when the price of coffee increased substantially in the 1970s, U.S. per capita consumption of tea increased to some extent. Tea contains some of the important reinforcing components of coffee (e.g., tea is a hot beverage containing caffeine), but not others (the taste of tea does not closely resemble coffee). Tea, therefore, can be classified as a partial substitute for coffee. Other partial substitutes (for most consumers) include nicotine-replacement products (partial substitute for cigarettes), powdered milk (for liquid milk), generic medications

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relation between reinforcers & Liebson, 1976). A complementary be demonstrated when d1e price of Reinforcer A (e.g., soup) and consumption of bod1 Reinforcers A and B (e.g., soup and soup decreases. The results of an experiment conducted by Mello,

Mendelson, Sellars, and Kuehnle (980) are shown in the right panel of Fig. 1.2 (as these data were reanalyzed by Bickel et aI., 1995). When me price of a

LOG PRICE OF ALCOHOL

FIG. 1.2. Effects of increasing prices of heroin (left panel), valium (middle panel), and alcohol (right panel) on projected levels of spending on heroin and valium (left and middle panels), and alcohol and cigarettes (right panel). The left panel illustrates that valium will substitute for heroin while the middle panel illustrates heroin does not substitute for valium. The right panel reveals a complementary relation between cigarettes and alcohol. From "polydrug Abuse in Heroin Addicts: A Behavioral Economic Analysis" by N. M. Petry & W. K. Bickel, 1998, Addiction, Vol. 93, pp. 321-335. Copyright @ 1998 by Carfax Publishing Limited. Reprinted with permission.

(for name-brand pharmaceuticals), and replacement therapists (when the primary therapist raises his or her hourly fees or moves to an office inconvenient to me client). Independents. As noted previously, not all alternative reinforcers compete with each other for the time and resources of the consumer. Sometimes introducing an alternative reinforcer will have no effect on consumption of and the resources allocated toward obtaining the first reinforcer. In a second component of the Petry and Bickel (998) study in which heroin addicts made hypothetical decisions about how to spend their money on drugs, the price of valium was increased while me price of heroin was unchanged (the reverse of what mey did previously). The results of these price changes are shown in the center panel of Fig. 1.2. Although increasing the price of valium decreased valium consumption, heroin intake was unaffected. When the slope of the heroin demand function approximates zero across the range of valium prices examined, we can conclude mat heroin is an independent, with respect to valium. These data raise an important point: Reinforcer A (valium) may substitute for Reinforcer B (heroin), but Reinforcer B may not substitute for Reinforcer A. Complements. When the introduction of an alternative reinforcer increases consumption of and resources allocated to obtaining another reinforcer, the new reinforcer may be classified as a complement. For example,

alcohol was decreased and cigarettes were available at a fixed price, consumption of both alcohol and cigarettes increased, indicating mat cigarettes functioned as a complementary reinforcer for alcohol. No assessment of me symmetry of mis relation was examined by Mello et al. That is, the price of cigarettes was not decreased while alcohol was available' at a constant price. If both cigarette and alcohol consumption were to increase under the latter conditions, men a symmetric complementary relation would have been observed. However, decreasing the price of cigarettes possibly could have had no effect on (independent)

or decreased alcohol consumption

(substitute).

Treatment Implications of Substitutes, Independents, and Complements. Together, these behavioral economic findings and concepts suggest that clinicians must carefully consider the context in which problem behaviors occur or from which healthy behaviors are absent. In decreasing the probability of problem behaviors, a therapeutic strategy suggested by behavioral economics is to remove as many complementary reinforcers from the environment as possible and replace these with reinforcers that may substitute for the problematic reinforcers. For example, in treating cigarette smoking, patients may benefit from concurrently abstaining from alcohol (which appears to function as a complement for cigarettes; Mello et aI., 1980) while using a nicotine-replacement product (which functions as a partial substitute for cigarettes). Conversely, when attempting to increase the frequency of healthy behaviors, the clinician must remove reinforcers that may substitute for the reinforcers that maintain these activities (e.g., for most humans, television probably substitutes for exercise) while concurrently increasing me availability of complementary reinforcers (e.g., for many, music serves as a complement for exercise). Because consumption of a reinforcer and the amount of resources allocated toward obtaining mat reinforcer covary, agonist pharmacotherapies that act as effective substitutes for illicit drugs are very appealing. Knowledge of the type and characteristics of effective substitutes for illicit drugs may be useful in developing substitute pharmacotherapies mat may prove beneficial in treating substance dependence. Methadone, for example, has been used for decades in the treatment of heroin dependence. This practice is

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widespread not because methadone by itself is effective in breaking an addiction to opioids but, in part, because heroin addicts maintained on methadone are less likely to engage in criminal behavior in order to support an expensive heroin habit (Marsch, 1998). In behavioral economic terms, methadone substitutes for heroin to the extent that opioid withdrawal symptoms are avoided (although at the doses commonly employed in therapy, it does not produce a substitute for the euphoria produced by heroin). Similarly, by providing free needles to heroin addicts, we make readily available a substitute for used needles and reduce the spread of AIDS. Knowledge of the illicit drugs that substance abusers are likely to begin using if the price of their primary drug of abuse is increased also may be useful during treatment and in managing this disorder. For example, if the potential side effects of the substitute drug(s) are found to pose a health threat to the addicted population (e.g., intravenous administration of a substitute drug may put the user at risk of contracting HIV) , then treatment efforts can focus on warning addicts about the risks of using and misusing the substitute drug or on providing a safer alternative. A particularly successful substance' abuse treatment, based in part on making available substitute and complement reinforcers, has been developed by Higgins, Stitzer, and their colleagues (e.g., Higgins et aI., 1994; Stitzer, Bigelow, & Liebson, 1979). In these treatment programs, patients earn vouchers by continuously abstaining from drug use. Vouchers may be exchanged for a range of goods and services available in the community, as long as these are consistent with treatment goals (Budney & Higgins, 1998). Vouchers, and the goods and services purchased with them, appear to function as substitutes for the reinforcers that maintain drug use. In addition to vouchers, patients receive skills training designed to increase the efficacy of social reinforcers (e.g., family relationships) that may. either substitute for drug reinforcers or complement nondrug reinforcers that addicts are sampling with increased frequency after entering treatment. A host of other treatment and prevention strategies emanating from this behavioral economic analysis of substitutes and complements are discussed by Carroll and Campbell (chap. 3, this volume) and Simpson and Vuchinich (chap. 8, this volume).

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Consumers Discount Consequences

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the Value of Delayed

A well-established principle within behavior analysis is that delayed consequences (e.g., reinforcers, punishers) are less effective in changing behavior than are consequences delivered immediately after the target response (e.g., Ainslie, 1974; Lattal & Gleeson, 1990; Mazur, 1987; Rachlin, 1974). Economically speaking, the value of a consequence is discounted as a function of the delay to its delivery. For example, the value of a canned drink from a vending machine would diminish if it were not delivered immediately. There

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can be little doubt that the frequency of using a particular vending machine would decrease if drinks were not released for 15 minutes after the button was pressed (especially if a machine delivering drinks immediately was located nearby). Said another way, a cold drink delivered 15 minutes from now is just not worth as much to us as a drink delivered immediately. Similarly, money scheduled to be delivered in the future is not worth as much to us as money in our pockets. This is illustrated when individuals who win a lottery and are scheduled to receive payments over several decades forfeit some percentage of their winnings to obtain a lump sum of money delivered now. As this example illustrates, "less is more" if the lesser amount is delivered now and the larger amount is delivered later. Treatment Implications of Discounting Delayed Consequences. The diminished ability of delayed consequences to control behavior r.lay be an important problem in the etiology and treatment of a number of health-affecting disorders. Consider, for example, the problem of cigarette smoking. Smoking a cigarette is relatively immediately followed by such reinforcing consequences as a nicotine rush, a taste smokers rate as favorable, improved concentration, and a calming sensation. Although these reinforcers are small when compared with the reinforcing consequences of cigarette abstinence (e.g., decreased probability of premature wrinkling, smoker's cough, emphysema, chronic bronchitis, stroke, heart disease, and lung cancer), "less is more" when the larger reinforcer is delivered later. The high rate of relapse in smokers attempting to quit suggests that the more immediate reinforcers associated with smoking are more effective in controlling behavior than are the delayed heath benefits of a successful quit attempt. Relapse to cigarette smoking, alcohol or drug abuse, or quitting one's diet are all instances of what behavior analysts and behavioral economists call preference reversals (e.g., Rachlin & Green, 1972), or what we might refer to in everyday vocabulary as "changing one's mind." Understanding how we discount the value of delayed reinforcers may help us to better understand why we "change our minds" frequently in our everyday lives and why relapse to food and drug addictions are so common. Much empirical research has focused on mapping the shape of the function describing how consequences are discounted over a range of delays. For these purposes, I confine my discussion to the discounting function describing the value of delayed reinforcers (as opposed to delayed aversive consequences). Figure 1.3 illustrates the diet choices faced by an obese individual. The height of the solid bars show the objective value of the reinforcers obtained by either eating a food item high in saturated fats (smaller bar) or by sticking to a low-fat diet (e.g., weight loss, improved appearance, increased frequency of compliments from others, decreased probability of health problems, etc.). Said another way, the height of the solid bars represents the undiscounted value of the respective reinforcers if we were to

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