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Modern society has achieved wonders in medicine, but many people are still at risk of suffering from noncommunicable diseases (NCDs), including diabetes, cancer, and cardiovascular diseases, to name just a few. NDCs also put great pressure on healthcare systems throughout the world. The good news is that simple lifestyle changes to improve your overall health and physical fitness can reduce the risk of contracting these diseases.

Studies have shown that lack of self-control is linked to unhealthy habits, which can then increase the risk of developing NCDs. Studies have shown this self-control issue to be associated with time-inconsistent, present-biased preferences. Simply put, people tend focus on the present more than the future, which in some instances can lead to negative outcomes. To help combat the growing number of deaths caused by NCDs, researchers Chen-Nan Liao and Ying-Ju Chen were interested in finding out whether a conditional cash transfer (CCT) programme could be used to encourage people to improve their unhealthy habits.

The researchers found that monetary incentives in the form of a CCT might be a powerful tool to reward someone after showing improved life habits. Other studies have shown this to be an effective method, but found that subjects would eventually return to their original lifestyle after a short-term intervention period. To overcome this issue, the researchers suggested the idea of implementing a long-term CCT programme that could take place over several decades. “The purpose of this kind of long-term program is to make people choose good life habits ‘within’ the intervention period,” they add. With this long-term arrangement, the incentive period would ultimately occupy a larger proportion of a person’s lifespan, and therefore reduce the risk of developing NCDs.

With this in mind, their study aimed to find an optimal CCT scheme that could be implemented by governments. They also wanted to determine whether such programmes could be profitable for companies who might sell enrolment packages to customers as self-commitment devices. Based on these circumstances, the researchers were also interested in seeing the possible outcomes and whether government intervention might be necessary.

According to the researchers, in many situations, a person’s behaviour and response to incentives is strongly influenced by not only their lack of self-control, but also their naivete about their lack of control. In which case, the researchers questioned whether special attention to naive or partially naive customers was important.

In their study, they “establish a multiple-period model in which a person with time-inconsistent, present-biased preference can choose whether to take good life habits in each period and he might develop NCDs in the last period with a probability that depends on his past behaviors”. Their study found that a person makes good life habits at a certain time point, and continues to make good decisions into the future. However, a delay between a person’s long-term plan and actual behaviour was revealed. This allowed the researchers to identify an optimal CCT scheme and conditional cash transfer, which should depend on a person’s age. They also found that a person’s naivete about their self-control problem had no influence on their actual behaviour and the optimal CCT scheme design, but did affect their willingness to pay. “Moreover, we find that the company can exploit the person’s naivete to improve its profit”, they explain. To address this issue, they put forward the possibility of various government intervention methods to help to mitigate this issue.