Availability Bias Strikes Again

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That friggin’ availability bias… Is there anything it doesn’t screw up? Here’s Jonah Lehrer on why we do (or, rather, don’t) buy health insurance:

I’m going to focus on just one of the myriad biases that warp our health insurance decisions: the availability heuristic. This is the obvious idea (at least it seems obvious in retrospect) that events which are more easily brought to mind also seem more likely. …

What does this have to do with health insurance? I’d argue that the sheer banality of most illnesses means that healthy people underestimate the likelihood of getting sick, just like subjects underestimating the frequency of consonants in the third position. We don’t think about bunions or torn ligaments or strep throat unless, god forbid, the affliction happens to us. Unlike a plane accident or a shark attack, there is nothing newsworthy about ordinary suffering – kidney stones don’t make the front page or the 11 o’clock news. (I’ve got several friends who purchased extended warranties for their computers but don’t have health insurance. I’d argue that this irrational contradiction occurs for two reasons: 1) they are overvaluing their computer at the time of purchase, thanks to the endowment effect and 2) it’s easier for them to imagine a broken computer than it is to imagine a broken body part.) Furthermore, there is something inherently unfathomable about pain unless the pain is ours; sickness is the same way. The end result is that when we’re healthy we routinely underestimate the likelihood of not being healthy, of needing an expensive medical treatment that we can’t afford. The bleak reality of life, however, is that illness isn’t an outlier – everybody gets sick.

It should be noted, of course, that society requires insurance for drivers precisely because it doesn’t trust us to make the right decision. We all think we’re above average drivers, so of course we won’t get into an accident. But then we do and it’s too late. I’m increasingly coming to believe that health insurance is the same way, and that we need society to save us from our own blinkered views of the future.

Like Lehrer, I find it increasingly hard — with a growing understanding of human nature — to think humans are really capable of making smart decisions about things like this. Simply, everything in our nature works against it. And the people with the least ability to overcome these biases tend to be exactly the people in need of the most care.