Putting Behavioral Economics to Work

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Putting Behavioral Economics to Work with Health and Wellness

Worksite Wellness Council of Massachusetts | November 15, 2011

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The Problem

Homo Economicus

(How we’ve viewed people)

Rational

Maximize value for self

Well informed

Likelihood of events based on objective probabilities and facts

Homo Sapiens

(How people really behave)

Boundedly rational

Use decision “short-cuts”

Make decisions using available information

Likelihood of events based on context, emotion, recent events

Benefit designs, communication, and delivery are based on assumptions about peoples’ behaviors that are proving not to be accurate

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We Use Mental Shortcuts

$______ $______

A cup of coffee and a newspaper together cost $3.50. The coffee costs $1.00 more than the newspaper.

How much does the newspaper cost?

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Do NYC Cab Drivers Maximize Their Outcomes?*

* Camerer et al., Labor Supply of New York City Cab Drivers: One Day at a Time. Quarterly Journal of Economics, 1997.

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Six Behavioral Tendencies That You Can Harness or Overcome

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Inertia: A Bias for the Status Quo

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Organ Donation

4.25

27.50

17.1712.00

99.98 98.00 99.91 99.97 99.50 99.64

85.90

0

10

20

30

40

50

60

70

80

90

100

Denmark

Netherlands

UK

Germany

Austria

Belgium

France

Hungary

Poland

Portugal

Sweden

Source: Johnson & Goldstein. Do Defaults Save Lives? Science, November 2003.

Effe

ctiv

e co

nsen

t per

cent

age

Explicit consent (opt-in)

Presumed consent (opt-out)

Plan Design: Leveraging Defaults to Overcome Inertia

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Overcoming Inertia with Ease: On-Site Flu Shots

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Temporal Discounting: The Tyranny of the Present vs. the Promise of the Future

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You Might Need to Lose Weight,But Why Do You Want to Start Now?

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New Contest at My Gym for the Holidays!

No Gain for the Holidays

Having a problem keeping off the pounds during the holiday season? Then we have the contest for you.

If you don’t gain a single pound from Nov. 21st until Jan. 2nd,

YOU WIN ONE FREE MONTH OF MEMBERSHIP!

You must weigh-in every Monday.*

*All contestants actual weights will be kept confidential.

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Loss Aversion: Losing Hurts Worse Than Winning Feels Good

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Framing Messages: Using Loss Aversion to Promote Wellness

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Plan Design: Using Loss Aversion to Save Money

Targeted employees with

maintenance medications

Prescription home delivery (Large retailer)

Two retail courtesy fills allowed

(a financial loss)

By third fill employees must...

Active decision required

Switch to home delivery

Stay at retail

Call PBM to switch

Pay drug’s full cost at retail

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Social Norms: What’s Everyone Else Doing?

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Social Norms: Smoking Is Addictive, but Quitting Is Contagious*

*Christakis & Fowler. The Collective Dynamics of Smoking in a Large Social Network. The New England Journal of Medicine, 2008.

“What people need to understand is that because our lives are connected, our health is connected.”

—Nicholas Christakis, M.D, Ph.D.

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Using Social Norms: Health & Wellness Events

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Using Leadership and Champions to Create Social Norms

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Using Social Norms: On-Site Screenings

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Choices: Liberation or Paralysis?

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Availability: Hearing the Wake-Up Call

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A New Customer Reality for Wellness Messaging?

A Possible Focus of Health Engagement Over the Course of One Year

Emphasize health engagement the other 50 weeks

AEpre-AE post-AE

Get flu shot; why it’s particularly important for

diabetics

Diabetes c.

Take an HRQ; special sidebar

on diabetes

Diabetes d.Diabetes a.

Reduce the focus on annual

enrollment

Diabetes b.

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Opt-in Text Messaging

Reminders

Calls to action

Behavioral campaigns

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A Way to Enhance Behavior Change Efforts

educate

motivate

facilitate

Make It EasyMake It Relevant

Health & Medicine

Putting Behavioral Economics to Work