American Journal of Economics

p-ISSN: 2166-4951    e-ISSN: 2166-496X

2018;  8(6): 279-288

doi:10.5923/j.economics.20180806.07

 

Understanding the Potential of Behavioural Economics on Establishing ‘Quality of Life’ Constructs

Mohamed Buheji

Founder of the International Inspiration Economy Project, Bahrain

Correspondence to: Mohamed Buheji, Founder of the International Inspiration Economy Project, Bahrain.

Email:

Copyright © 2018 The Author(s). Published by Scientific & Academic Publishing.

This work is licensed under the Creative Commons Attribution International License (CC BY).
http://creativecommons.org/licenses/by/4.0/

Abstract

Rapid developments in the diagnostic sciences of human behaviour, especially in the fields of Neuro- and Behavioural-Sciences, have been reflected in many humanities, including economics and society. With the emergence of many studies with the spread of applications of Functional Magnetic Resonance Imaging (FMRI); the impact of behaviours on humans’ decisions and in the achievement of their aspirations have started to reflect on the efforts of improving the communities’ quality of life. FMRI and other brain and emotional gadgets now are exciting many economists to pay more attention to optimising the role of thinking, mind, spirit and heart in different industries. In this paper, we shall explore the future impact expected of behavioural economies on the realized meanings and means of ‘Quality of Life’ (QoL), as per OECD (2017) requirements. This paper discusses the new behavioural economics (BE) influence using the Nudge and inspiration labs literature which were applied by the researcher for the last five years. The paper compares the different BE approaches and their impact on ‘quality of life’ as a potential source for communities’ development. The paper reflects lots of case studies conducted and published by the researcher in different countries. The paper concludes with recommendations for more focus on using BE’s approaches including Nudge in pushing for the betterment of QoL realised situations specifically in developing countries.

Keywords: Quality of Life, Economics of Human Behaviour, Behavioural Economics, Inspiration Economy, Nudge, Resilience Economy, Youth Economy, Socio-economy, Inspiration Labs, Social Engineering

Cite this paper: Mohamed Buheji, Understanding the Potential of Behavioural Economics on Establishing ‘Quality of Life’ Constructs, American Journal of Economics, Vol. 8 No. 6, 2018, pp. 279-288. doi: 10.5923/j.economics.20180806.07.

1. Introduction

Behavioural Economics (BEs) has developed very rapidly in the past three decades and has become the leader of all new democratic economies. This interest has increased with the recognition of the Nobel Prize for this behavioural liberal economics, which has given hope to new economies such as the economy of inspiration. In the same time, leading governments have become thinkers and resources that give greater importance to the implementation of behavioural economics tools to improve the outcomes of government services towards improving their communities. Therefore, this paper examines the role of modern behavioural economics two main approaches to focus on their role in improving the quality of life, especially in developing countries. The Economist (2012), Buheji and Ahmed (2017a); Sanders and Halpern (2014).
BE is considered one of the most promising coming economies that focuses on exploring the potential forces or the capacity within the intrinsic power of the communities. Among these economies are the economies of knowledge, inspiration, resilience and youth that use the laboratory methodology to see opportunities in a challenge. They are called in general Inspiration Labs. In this study, we will identify the impact of these Labs on the speeding up the achievement of quality of life indicators. Buheji and Ahmed (2018), Thaler (2015).
The paper presents the results of the new behavioural economies and how researchers and practitioners can benefit from them for future Quality of Life (QoL) initiatives. The methodology and then discussion show how these BE approaches are disciplined and ultimately lead to outcomes and impact that improves the quality of lives of communities while developing the human mentality and raising its ability to explore. Nagatsu (2015).

2. The Importance of This Study

The theoretical and practical importance of the study is that it builds a rare relationship between the ‘quality of life’ and the creation of ‘Behavioural Economics’ practices and exploring the intrinsic capabilities of institutions through focused laboratories. As for practical importance, it clarifies to the scientific and local community the differences between the economics of behaviours of all kinds and ways of applying them to the advancement of society and institutions.

3. Literature Review

3.1. Behavioural Economics

Behavioural economics combines the fields of psychology, economics, management and change with sociology to contribute to the development of the communities and solving complex problems, along with making more effective decisions that bring betterment to economics and communities development. This collective science of behavioural economy examines the field of behaviours change which has psychological, social, cognitive and emotional opportunities reflected on the quality of life. Behavioural economics laboratories have shown to have the role of social engineering in relevance to improving the socio-economic decisions of individuals, institutions, communities and resource revenues (Sunstein, 2015), Buheji (2018b). Therefore, it is not surprising that many scientists have won the Nobel Prize in the past 30 years, such as Richard Thaler (2017), Daniel Kaneman (2002), George Ackeroff (2001), Gary Becker (1992) Simon (1978).

3.2. Definition of Quality of Life

Quality of Life (QoL) can be defined as the practice of upgrading the social, health, psychological and environmental aspects of life so as to achieve a decent, safe and stable life, for every individual and family in the community. Successful QoL programs are expected to promote patterns of choices for of the best life practices by providing more options for citizens, Buheji (2016). OECD (2017) specified that (QoL) can be represented and measured by the following main constructs: housing, income, jobs, community, education, environment, civic engagement, health, life satisfaction, safety and work-life balance.
Quality of life focuses on improving political, environmental, social and cultural factors that positively affect overall health, such as providing security, renouncing violence, reducing poverty, eliminating unemployment, education, providing healthy housing and protecting the environment. It also focuses on quality of life of people exposed to risk affecting healthy lifestyles such as smoking. The quality life practices might mean thus enhancing the physical activity, or healthy food, or personal hygiene, or the proper management of health facilities such as emergency rooms or health centres and safety on the road. Buheji and Ahmed (2018), Barcaccia (2013), Johnston et. al. (2009).

3.3. Improving Quality of Life Indicators – the Bahraini Experience

Many countries have done different work relevant to the quality of life, specifically in the last one decade, however few have been related to national plans. Within the framework of a project undertaken by the researcher with the government of the Kingdom of Bahrain; over a period of several years, major indicators in several fields of the quality of life were measured and identified. The researcher identified with the leaders of the Government of Bahrain the role of government institutions in creating quality of life indicators that influence the behaviour of the citizens and in the same time help to create development towards the country’s vision 2030. The QoL indicators where set to improve the aspects of social, health, psychological and environmental life, which would lead to the satisfaction of the individuals and the families besides all the society. promotes patterns of best practices of life through the availability of options for citizens and residents. The efforts of the Inspiration Labs have therefore been concentrated in the following five areas:
First - Family stability - Provide security and stability for the family of various types and social conditions to reach a safe and stable family environment by ensuring the needs of the family and enhancing their health and psychological integrity through family cohesion and self-reliance.
Second- Health Protection - to raise the level of public health of the individual and the practices related to community health promotion and prevention before treatment. As well as protecting the Bahraini society from non-communicable diseases as a shared responsibility among all groups of society through the optimal use of resources to reduce disease, death and disability due to non-communicable diseases and its complications.
Third- Education Outcome- to raise the level of teaching and learning in all its forms.
Four- Economic Development – to raise the economic impact of the citizens and differentiate of intrinsic power resources.
Five- Protection of Environment and Natural Resources- To promote the values of sustainable development to preserve human life, and to protect the environment and the natural use of natural resources. As well as protecting, rehabilitating and improving the environment through community partnership.
These five areas contribute to the enhancement of quality of life and the development of infrastructure and services that promote health and environmental health, reduce traffic injuries and reduce transport from harmful emissions. They also contribute to providing the best types of housing services suitable for citizens with low incomes to ensure their stability and achieve decent living conditions. Blanding (2017); Tinkler (2011).

3.4. Behavioural Economy and Its Approaches

Socio-economic research, policies, practices and processes, with all its traditional tools that emerged almost three centuries ago, proved today that they are insufficient to the development of human achievements. So the behavioural economy came to call on methodologies that connect psychology and economics in many ways.
There are many approaches in behavioural economics that depends on ideas of a ‘single way of thinking’, Nudge is one example. However, in this paper we closely focus on the approach of Inspirational Labs which can be characterized by ‘different ways of thinking’ as it uses exploration techniques for discovering hidden opportunities with visualisation of larger objectives in life. Buheji (2016), Thaler and Sunstein (2008). Sugden (2009) have all reviewed how these BE approaches develop a simple change in the environment of the targeted community which have significant impact on the community behaviour and thus in subsequent economic situations. Sugden (2009) justified that these economic approaches can be like small interventions that encourage individuals to make different decisions. The Economist (2012) and Buheji (2018b).

3.5. Theory of Nudge and Quality of Life

Nudge theory is the foundation of a concept that contributes to a social and perhaps even a relatively large and hidden socio-economic transformation. It encourages people to make decisions that are in their broad personal interest and the interest of governments to achieve their role towards setting a better standard of living. The theory of Nudge is based on Richard Thaler and Cass Senstein book which focuses on knowing how people think, and how we can make it easier for them to choose the best for themselves, their families and their community thus makes it easier for these citizens to make certain decisions for the betterment of life. Cambridge (2018); Hansen (2016); Samson (2015), Thaler (2015), Sunstein (2013).

3.6. The Impact of Economics of Inspiration on Quality of Life

One of the best contemporary works that focused on the exploration of inspiration and its uses is the study of Thrash and Elliot (2004), where inspiration is defined as a state of transformation into new qualities that ignites a continuous flutter of the soul and contributes to the development of creative ideas that can lead to an effective outcome. This creative outcome comes through creative tangible approaches that influence type of services delivered in the society. Recent studies explore how the approaches of the inspiration currency can affect transformations from being situational to becoming sustainable.

3.7. Psychology and Economics

Economic theories are usually based on how people make decisions. However, over the past three decades, there has been a significant development of ‘positive psychology’ and socio-economic behaviour. Inspiration-style laboratories, similar to Nudge methodology, mainly come from the fields of psychology, economics, sociology and change management. Nagatsu (2015)
All studies published in the past 20 years, such as Ariely (2008; Shiller, 2005; Cialdini, 1998), demonstrated the importance of behavioural and psychological factors in the shaping of social, environmental and economic decisions and outcomes. These and other authors argue that social and behavioural factors are important to eliminate the limitations of human choices and prevent them from building an integrated personality and complete information, or building unregulated cognitive ability or self-control (Sugden, 2009).
Inspiration Labs and their applications have many practices that contribute to the industry of happiness and well-being and build common psychological bridges with other concepts to establish quality of life practices. Inspiration Labs promote mutual thinking towards better quality of life for communities because they are linked to exploration endeavours. This type of attempt helps people mitigate the challenges they face in life, overcome failure, break risk aversion, build strong personalities and have a strong ability to learn and adapt.

3.8. Behavioural Economics Applications in Quality of Life

Behavioural economics applications in quality of life acts as an alert, and opens up more options. For example, in UK, Nudge was used in improving public services, and managing pensions. (Instituteforgovernment.org.uk.2010). Government departments in Denmark, Australia, Canada and the Netherlands have also launched similar programs in health care, such as obesity treatment, social welfare such as unemployment compensation, energy efficiency, household recycling and consumer credit. Wilkinson (2013)
McAuley (2007) and Samson (2015) explored the use of design engineering and options which contributed to solving many social problems and reducing their negative impact. While Thaler and Sunstien (2008) study found to selectively structure contributions to changing people's behaviour in a predictable manner without significantly preventing any options or changing their economic incentives. For example, this guided choice makes it easier to avoid unhealthy food in the cafeteria, or join the plan to raise the contribution to the pension fund.
As for the inspiration labs which were established in the government program in the Kingdom of Bahrain and led by researcher and continued for three years. The impact of inspiration engineering and its laboratories on the use of hidden problems and opportunities of quality of life touched many areas as basic and higher education, social development, electricity and water services, primary care, secondary care, public health, psychiatric services, applied sciences, industry, commerce, training and development, social security fund, quality assurance in education, labor market and fund, women's council, customs, visas, passports services, municipal services, the national center for exhibitions and conferences, road works, the tender board, housing services, police and security services, ports, maritime services and land ownership and registration. (Buheji and Ahmed, 2016; Buheji, 2015).

3.9. Influence without Authority and Quality of Life Requirements

In order to create a positive change in any culture, people need to feel that they had the choice for choosing their paths in relevant to quality of life decisions. To ‘influence without authority’ or ‘influence with minimal resources; means we need to deal with chronic social and economic problems such as poverty, low ambition to achieve a role in life, low quality of life, low youth productivity, social and political instability, low productivity, high youth migration and business instability issues; using intrinsic powers, Buheji (2018c). As mentioned in Buheji (2016 and 2018a), power-free methodologies contribute to increased demand for more waves of innovation, co-existence, and flexibility, which can lead to greater results for communities (Cohen and Bradford, 2005). Therefore, this paper would investigate and focus on inspiration labs more than Nudge as a representative for behavioural economics where the approach would be tested for its type, rather than level of influence in creating better quality of life.

4. Research Methodology

A qualitative methodology is used through tables that target to illustrate the differentiated impact of two methodologies of behavioural economics and their benefit in creating the quality of life indicators that were set by OECD (2017). Hence, the target is to compare the benefits of both Nudge and Inspiration Labs on the field of Quality of Life Industry based on the proven history of differentiation and the value-added characteristics of both approaches. The research aims to clarify the level of ‘return of behavioural change’ that has been created, the level of ‘capacity development’ and the ‘impact on social welfare’ besides the ‘change of mindset’.
Twenty-five types of business sectors which have direct impact on the communities’ life were selected for measuring the influence of the two behavioural economics approaches in order to ensure on what areas did it influence in QoL taking again OECD (2017) QoL framework as a reference. The following are the businesses identified:
1. Education
2. High Education
3. Social Development
4. Electricity Services
5. Primary Care
6. Secondary Care (Hospitals)
7. Public Health
8. Health Enrichment
9. Psychiatric Services
10. Pension Fund & Social Insurance
11. Woman Council
12. Municipality Services
13. Labour Market
14. Minimising Traffic Accidents
15. Sewage Sanitary System
16. Municipalities and Urban Development
17. Housing Services
18. Police Services
19. Humanitarian Services Agency (NGO's)
20. Socio-Economic Role of School Dormitory
21. Women Entrepreneur-ship NGO
22. Graduating and Unemployed Graduate Students Mindset Management
23. Inter-Generations Gap
24. Management of NGO’s role in creating better Socio-Economies
25. Improve learning capacities to lifelong learning citizens on activities

5. Findings

5.1. Basis of Findings

In this study, we mentioned the two main approaches of behavioural economics and their level of contribution to QoL. The first method was through research and verification of what is published in scientific research on both approaches. Then the second method was through comparing the outcome of these approaches in relevance to OECD (2017) framework. This comparison is based on the following key criteria:
A) the level and type of ‘behavioural change’ that leads to establishing ‘quality of life’,
B) the level of capacity development achieved through the pursuit of ‘quality of life’,
C) impact on ‘social welfare’,
D) ‘Change mentality’
Based on previous criteria, the comparisons focused on ways of dealing with development and behavioural change, the simplicity of the solutions taken and their impact on the level of complexity of the problem, the role in effective decision-making, the method of mentality that contributed to dealing with hidden opportunities and ways of influencing quality of life without extra resources or authority. Buheji (2018b).

5.2. Measuring the Impact of Economics of Behaviour and Inspiration on QoL

Based on the synthesis of literature about how to create an impact on QoL outcome in any country or community, one could conclude that focused involvement is needed on specific QoL activities to create a measurable result (Mathieu et al., 2000; Hogg and Cooper, 2007). QoL indicators to be realised in any society need more deep and dedicated work of behavioural economics approaches, as the outcome of these approaches found to clearly influence people life style.
In Table (1) we show examples of the work delivered by inspiration labs approach, in relevance to the OECD (2017). The outcome of QoL constructs influenced are gauged in: education, health, safety, civic engagement, community development which enhance the life satisfaction and raise the capacity of more QoL trends, as listed in the table examples. (Buheji and Ahmed, 2017, Dolan et al. 2010).
Table (1). Shows the focus of Inspiration Labs in creating QoL constructs

6. Discussion

Reviewing all the OoL constructs in Table (1) shows that inspiration labs, as a BE approach can have a direct influence on OECD (2017) QoL indicators. From the literature reviewed both, Nudge and Inspiration labs seems to focus on practical application of QoL constructs. However, the integrated approach of Inspiration Labs seems to differentiate its influence on QoL through the models or the projects done in the different fifty businesses listed.
The different projects listed in Table (1) shows that certain behavioural economics, inspiration economy projects or models there have more impact which address more QoL indicators recommended by OECD (2017). The table shows that inspiration labs and similar BE approaches can help in improving the capacity of the communities towards establishing QoL sources such as establishing effective welfare system with profound changes.

7. Conclusions

This paper identifies the role of modern behavioural economics, specifically inspiration labs, in bringing about effective societal change in relevance to QoL. The importance of this paper is that it fills a gaps in literature in relevance to speeding up the development of the societies quality of life. The paper sets a clear approach for establishing quality of life and social welfare. The paper shows a clear approach for creating a change in the community mindset and the QoL long-term outcomes. The researcher recommends continuing in this line research, because of the wealth of data that could contribute to the developing socio-economies.
Therefore, it is highly recommended to use the opportunities that inspiration labs bring to various governmental and community QoL issues. More research is recommended in relevance to keeping QoL constructs towards creating new cultures that can bring variety of solutions to problems and could raise in same time the quality of life and in effective ways.

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