Using institutional and behavioural economics to examine animal health systems.

Abstract

Economics provides a framework for understanding management decisions and their policy implications for the animal health system. While the neoclassical economic model is useful for framing animal health decisions on the farm, some of its assumptions and prescriptive results may be unrealistic. Institutional and behavioural economics address some of these potential shortcomings by considering the role of information, psychology and social factors in decisions. Framing such decisions under contract theory allows us to consider asymmetric information between policy-makers and farmers. Perverse incentives may exist in the area of preventing and reporting disease. Behavioural economics examines the role of internal and external psychological and social factors. Biases, heuristics, habit, social norms and other such aspects can result in farm decision-makers arriving at what might be considered irrational or otherwise sub-optimal decisions. Framing choices and providing relevant information and examples can alleviate these behavioural issues. The implications of this approach for disease policy and an applied research and outreach programme to respond to animal diseases are discussed.