Prof Aljoscha Janssen
Feature on Aljoscha Janssen, Assistant Professor of Economics
School of Economics, Singapore Management University
Better health through better markets
From drug development and marketing to choices made by pharmacy customers, Aljoscha Janssen, Assistant Professor of Economics at SMU’s School of Economics, analyses market behaviour in the health system to make it work for wellbeing rather than profit.
Picture yourself in a local store looking for paracetamol. Do you look for a particular brand, a familiar colour and various promised effects, or do you scan the price tags for the cheapest version?
If it’s a favourite brand you are looking for, welcome to the majority. This was starkly shown in Singapore’s early 2022 Omicron wave. Branded paracetamol flew from the shelves while plain packaged generic brands sat untouched, despite being under half the cost.
This phenomenon is due to a “quality misconception”, says Assistant Professor Aljoscha Janssen, who examines healthcare systems through the lens of market economics. He likes to use the painkiller example to illustrate why it is important to understand healthcare as a market. The economic decisions of people throughout the system—drug manufacturers, marketers, even retailers—cumulate to become as significant to health outcomes as medical knowledge and skill, suggests Janssen. Though disparities in medical knowledge are sometimes the problem, as he found when examining purchase decisions in Sweden.
“We found that doctors and pharmacists choose the cheapest products. But other consumers choose the more expensive products. They either do not know or believe that the generic brand is essentially the same, and so perhaps unwittingly pay a brand premium,” explains Janssen. “Improving customer knowledge and choices could improve competition and reduce medical costs,” he adds.
Diagnosing incentives in the health system
Market factors run deep in the health system and determine big questions, says Janssen of his choice to dedicate his economics expertise to health. “How do we make pharmaceutical companies focus on important health areas? Why did the Covid vaccine appear quickly, while solutions for other problems, like dengue, take a long time?”
To illustrate the complex and intertwined relationship of these questions, Janssen points to the serious example of the United States’ opioid epidemic. Legal prescriptions were found to have fuelled if not sparked the epidemic. “Researchers are still working to understand what mistakes led to this big problem. What was the role of manufacturers? Were pharmacy controls inadequate? Were there bad intentions, or were financial incentives to blame?” The string of questions illustrates the need for rigorous economic analysis of how competition affects medical care, especially as the answers may be counterintuitive.
“Though many are sceptical of big health companies, in this case the small pharmacies were the worst sector. They were more dependent on financial incentives. And in larger chain pharmacies, employees have no incentives to dispense a particular prescription drug.” Such dynamics complicate the question of whether competition leads to better outcomes, he adds.
Observing public health through the cash register
Economics also helps us understand public health—the task of promoting health among wider society—in surprising ways. One such area that interests Janssen is how market dynamics influence ‘risky’ consumer behaviour, such as the purchase of drugs and alcohol. Here, attempts to sell more products combine with social behaviour and the biology of addiction, to create significant challenges for regulators and public health officials.
Again, market data can help, says Janssen. He is currently examining the lasting effects of pregnancy on alcohol choices. “Most people follow the advice to not drink during the nine months of pregnancy. The question then becomes, ‘what happens after the nine months?’”
To answer this question, he has turned to data gathered from grocery store checkout scanners. The scanner data tells us a lot about what families buy and, in turn, what that tells us about their lives.
“We found pregnancy had a strong and long-lasting impact on alcohol consumption within the family, which not only goes down but stays down,” Janssen reports. Among the population covered by the study, households reduce their alcohol purchases by 36 after a first pregnancy. After pregnancy, alcohol purchases remained at 34 percent lower than before pregnancy. “This shows that pregnancy can be an opportunity to change lifestyle habits – such as lowering alcohol consumption – as there are many positive reasons to do so.”
Health prediction and impact through machine learning
As in the case of retail data, machine learning is helping health economists find valuable insights in very large data sets. Janssen says the key difference between traditional research and machine learning is that it adds prediction powers to the traditional focus on establishing causation, or, ‘whether x leads to y”.
“We can use machine learning to predict that people aged 18 to 35 are more likely to purchase a certain product, but it’s not a causal relationship. It’s not saying that because you are aged between 18 to 35, therefore you are buying this product.”
Machine learning methods help Janssen deal with large volumes of data. “New research projects often involve ploughing through lots of text. Machine learning helps us to analyse and structure text quickly, saving time and effort.”
What excites Janssen most about his research is the positive impact he can bring to social wellbeing through better health outcomes, especially as spending pressures increase with an ageing population.
“Thinking ahead is important, especially with the ‘silver wave’. Reducing inefficiencies through understanding market choices is a great opportunity. I hope my research helps people to live healthier, better lives,” Janssen concludes.