Risk Compensation Theory:How Promoting a Risk-Reducing Offering

Can Encourage Risky Behaviors

Paul N. Bloom

Kenan-Flagler Business School

University of North Carolina at Chapel Hill

Overview of Presentation

• Introduce the problem

• Propose a few theoretical notions

• Report on initial empirical results

• Suggest future research directions

The Problem

• Remedy products/messages seek to reduce the perceived costs and increase the perceived effectiveness of risk-reducing remedies.– But messages could instead reduce the perceived

risks of the risky behavior, undermining risk avoidance (like a “get out of jail free or cheaper” card)

• Evidence of “risk compensation” (or risk homeostasis or offsetting) in studies of: seat belts, antilock brakes, bicycle helmets, low-alcohol beverages, condom use, HIV drugs, and Subway ads– But why do some people compensate and others

don’t?

Perceived Risk

RemedyMessage Exposure

Perceived Severity of Harm

Perceived Costs of Remedy

FutureRisky Behaviors

Perceived Likelihood of Harm

PastRisky Behaviors

Perceived Self-Efficacy at Reducing Risk

RiskTolerance

For Smokers/Borrowers/etc.: Message increases self-efficacy (which is high anyway), lowers perceived costs, lowers perceived likelihood of harm,lowers perceived severity, increases risky behaviors (especially for risk tolerant).

For Non-Smokers/Borrowers/etc.: Message has little effect on self-efficacy or perceived costs or perceived likelihood of harm, increases perceived severity, reduces risky behaviors.

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Results of Four Studies

• NRT Message vs. Risk Avoidance Message; past behavior measured

• Debt Consolidation vs. Risk Avoidance; past behavior manipulated.

• Diarrhea Remedy vs. Risk Avoidance

• Safer Cigarette vs. Risk Avoidance

Experiment 1: NRT• 2 (Remedy message: Nicotrol v. control) x

2 (Problem status: smoker v. non-smoker) x 2 (Target judgment: other v. self) mixed design.

• Random assignment to message• Screened for smokers and non-smokers on

campus• Used Rindfleisch and Crockett (1999) risk

perceptions scale and other scales about “John and Jane Smoker” first – then more direct questions

LIVE A SMOKE-FREE LIFE AND LIVE LONGER AND HEALTHIER:

INTRODUCING THE NICOTROL INHALER…

Proven to be successful. Easy to use and worth it.

“WHY SHOULD I QUIT SMOKING?”

Smoking cigarettes has lead to the premature death of over 430,000 Americans each year as well as extended suffering from debilitating illnesses such as cancer, heart disease and emphysema. It has been established that smoking is responsible for 1 out of 5 U.S. deaths each year. For every 3 people who begin smoking and smoke on a regular basis, 1 will die of a smoking-related illness. Remember, the damage caused by each cigarette is cumulative: every cigarette increases the odds of premature illness and death.

“WHY SHOULD I USE NICOTROL?”

Nicotrol works! In clinical trials even heavy smokers achieed high success rates with the Nicotrol system. Many had failed to quit both on their own and with other methods. Nicotrol is unique. Achieve your smoke-free goals with Nicotrol.

“CAN I SUCCEED WITH NICOTROL?”

Quitting smoking has never been easy. But the Nicotrol system is easy to use, so people stay with it. Simply substitute the Nicotrol inhaler for your own smoking habits; as your body adjusts to not smoking, you stop or slowly reduce the dosage.

LLIVE A SMOKE-FREE LIFE AND LIVE LLONGER AND HEALTHIER

Preparing yourself for quitting smokingDecide positively that you want to quit. Try to avoid negative thoughts about how difficult it might be.List all the reasons you want to quit. Every night before going to bed, repeat one of the reasons 10 times out loud.Develop strong personal reasons in addition to your health and obligation to others. For example, think about how much money you spend on cigarettes each week, month, or year, as well as all the time you waste taking cigarette breaks, rushing out to buy a pack, hunting for a light, etc.Begin to condition yourself physically. Start a modest exercise program, drink more fluids and get plenty of rest.Set a target date for quitting – perhaps a special day such as your birthday, your anniversary, or the Great American Smokeout. If you smoke heavily at work, quit

Other smokers Self

Problem Status: Target:

FIGURE 4: SMOKING RISK PERCEPTIONS AS A FUNCTION OF PROBLEM STATUS, REMEDY AND TARGET (OTHER SMOKERS VS. SELF)

  

2.5

3

3.5

4

4.5

Control Nicotrol Remedy

Message

Ris

k P

erc

ep

tion

s (1

-5 s

cale

)

Non-smoker

Smoker

Non-smoker

Smoker

  

DebtLess is a debt consolidation program offered through various financial institutions. With DebtLess, you can combine credit cards, auto loans, student loans, etc. into one lower monthly payment and save thousands of dollars in interest and late charges. If high interest rates are eating you alive, DebtLess can help! Contact your local financial institution for further information.

The advantages of a debt consolidation loan include:You pay less each month.You may be able to deduct interest off taxes.You can send out one payment instead of several.You can eliminate creditor harassment.

EXPERIMENT 2: Debt Consolidation

FIGURE 5: FINANCIAL RISK PERCEPTIONS AS A FUNCTION OF PROBLEM STATUS AND REMEDY

  

1

1.5

2

2.5

3

3.5

4

4.5

5

Control Remedy (loweffectiveness)

Remedy (higheffectiveness)

Message

Ris

k P

erc

ep

tion

s (1

-5 s

cale

)

Good FinancialHealth

Poor FinancialHealth

 

Experiment 3: Diarrhea Remedy

PharmaCure is pleased to announce a new antibiotic medicine specifically developed for the prevention and treatment of “traveler’s diarrhea”.

Diarrhea is by far the commonest cause of ill health in travelers, affecting an estimated 50% of all travelers. It may cause anything from embarrassment and inconvenience to misery and disruption of travel and business plans. If not immediately treated, it may even be fatal. Contaminated food and drink are the most common sources of bacterial agents (e.g., e.coli, listeria) that cause traveler’s diarrhea. Common sources of contaminated food

and drink:Unpasteurised milk, dishes containing eggs (e.g., sauces, many desserts) and ice creamUncooked food – even fruits and vegetables (unless they can be peeled or shelled)Cooked food that isn’t thoroughly and freshly cooked (i.e., piping hot)Water, including drinks made with water or ice

FIGURE 6: HEALTH RISK PERCEPTIONS AS A FUNCTION OF REMEDY EFFECTIVENESS

   

3

3.5

4

4.5

5

Control Remedy (loweffectiveness)

Remedy (higheffectiveness)

Message

Ris

k P

erc

ep

tion

s (1

-5 s

cale

)

Experiment 4: Safer Cigarette

• Control vs. Arrive

ACS vs. Arrive

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0.5

1

1.5

2

2.5

3

3.5

4

So

cial

Ris

k

Non-Smokers

Smokers

0%

10%

20%

30%

40%

50%

60%

70%

80%

Control vs. Arrive

Pro

b.

Qu

it S

oo

n

Non-Smokers

Smokers

Future Directions

• How are “susceptibles” affected by remedy messages? Can messages tip the balance?

• Does framing of remedy messages (prevention or promotion) make a difference?

• Can people be inoculated against a boomerang effect?

• How do you persuade people to use a remedy sooner rather than later?