Tuesday, November 02, 2010

A Biter's Market

Halloween always brings back a lot of wonderful memories for me. Like so many kids, trick-or-treating may have been my favorite few hours of the year. And while costumes and free candy are always appealing, there was also some thrill to the hunt. At least for me, just getting the candy was satisfying, regardless of if I liked a particular treat, or if I already had more candy than I would ever be allowed to eat! If an economist assumes that kids get some utility from “the hunt,” or at least that it is costless to kids to continue to go to houses for as long as they are allowed, then the result is that kids will get as much candy as is offered to them, regardless of how much or little they value it. If kids end up with a bunch of candy, many people are concerned about the health effects associated with eating it all. One interesting attempt to work with the fact that kids will get candy but reduce their consumption has come from a very interesting program where dentists offer to buy Halloween candy back from their patients. By offering a monetary incentive, these dentists are accepting that kids will gladly gather as much candy as possible, but perhaps their consumption can be changed if they are given more incentives than just a promise of “healthier teeth.”

Most economists would look at this program and talk about how its organizers are trying to incentivize kids by increasing the payoff of an otherwise less desirable choice. At the frontier of current research, economists are developing models to analyze the fairest and most efficient way to do this. Some economists may also suggest that this program’s goal is to influence a child’s preferences so that she will make different (healthier) decisions in the future. However, the ability of programs to change preferences is currently an open question in economic research.

Discussion Questions:

1. What other sorts of behaviors might dentists want to subsidize? What are some other examples of when a healthcare provider tries to encourage a healthy behavior?

2. Why might a program, like the one above, be unsuccessful at reducing candy consumption?

3. How much money would you need to be paid to sell a pound of Halloween candy? How much candy would you sell if you had five pounds? What about fifty pounds?

4. Do you think the amount of money a child already has will influence his or her decision to sell some candy? In what way?

5. Right now, anyone choosing to sell candy can pick which treats they sell. How do you think participation in the program would change if the pound of candy was selected randomly from all the candy collected trick-or-treating? What if the most dentally damaging candies were priced higher?

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