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How behavioural economics can help us understand the causes of poverty

In the area of poverty, what you need to be focusing on are (a) how behavioural economics can help us understand the causes of poverty, and (b) what behavioural economics implies about the policies that may be needed to stop people from ending up needlessly poor and for helping those who are struggling with poverty to improve their situations. In doing this, you may be wise to take a long-term view of how poverty arise – i.e. people who are presently amongst Australia’s poor may have ended up in this situation as a consequence of decisions they (or even their parents) made many years ago, rather than, say, because they have been having trouble finding work recently. Also, in considering how people have trouble escaping from poverty you may be wise to consider how being poor affects decision-making.

In the area of health, you need to focus on (a) how behavioural economics can help us understand how people make choices that have negative implications for their health, (b) how they make their decisions about when and how to seek assistance from health professionals, (c) the extent to which people comply with the treatment plans offered by health professionals, and (d) what all this implies for policies aimed at improving health and reducing the burden that health issues impose on the Government.

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It may also be possible to offer behavioural insights in relation to the supply-side of services that deal with poverty and health. For example, consider whether behavioural economics may have anything to offer in relation to the problem of attracting doctors to work in more remote parts of Australia, away from the major cities, or how doctors choose new drugs and other treatments.

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