Traditional economists believe that humans behave in logical, rational ways and will always act in their own best interest. Experience shows, however, that this isn’t always the case. The healthcare arena is full of examples of people engaging in irrational behavior. For instance, you know that exercising is good for your long-term well-being. Yet, how many times have you avoided going to the gym because it’s too cold (or too hot) or it’s too late in the day (or too early)?
Irrational human behavior seems to be the norm. So how can nudge people toward healthier lifestyles and choices? Behavioral economics may be one option.
Heuristics and Cognitive Biases: One Explanation Why We Act in Irrational Ways
Every day we’re bombarded with choices. As a result, humans rely on heuristics or mental shortcuts to speed the decision-making process. Heuristics are useful, but one disadvantage is that they can bias how people think. Cognitive biases are systematic errors in thinking that affect the way individuals make decisions and judgments.
Some cognitive biases are related to memory. The way a person remembers an event may be biased for any number of reasons. This can contribute to biased thinking and decision-making. In some cases, cognitive biases are related to problems with attention. Attention is a limited resource, so we must be selective about what we pay attention to. This too can lead to subtle biases that influence the way we think about the world.
Here are four examples of common cognitive biases that can affect how individuals make decisions related to their wellbeing:
- Anchoring bias. People often focus heavily on the first piece of information they hear. In a salary negotiation, for example, whoever makes the first offer establishes a range of reasonable possibilities in each person’s mind. The first piece of health-related information that individuals hear can also influence perceptions and behaviors.
- Availability heuristic. People frequently overestimate the importance of information that is available to them. For instance, a person might argue that smoking isn’t unhealthy because they know someone who lived to 100 and smoked three packs of cigarettes a day.
- Bandwagon effect. The probability of one person adopting a belief increases based on the number of people who hold that belief. This is a powerful form of groupthink. A health-related example is individuals who belief that vaccines are risky, because a vocal group of anti-vaxxers have distributed false information.
- Blind spot bias. Failing to recognize one’s own cognitive biases is a bias in itself. People tend to notice cognitive and motivational biases much more in others than in themselves.
Leveraging Behavioral Economics Principles to Overcome Cognitive Biases Related to Healthy Actions
A recent article by the Commonwealth Fund described how healthcare programs based on conventional economic principles typically have poor results, because people are “predictably irrational.” The authors suggest that redesigning engagement strategies using behavioral economics concepts may perform better because they recognize human limitations, rather than fighting against them.
HMS also believes that behavioral economics is a promising methodology to use for member engagement. Incorporating behavioral economics-based messages into campaigns is a good way to direct people to resources, programs, and information that promote better health.
Here are three examples of behavioral economics in action within the context of HMS’ Eliza member engagement platform:
- Loss aversion. The thought of losing something, even something people didn’t know they had, is a powerful motivator. This is especially true when the loss is contrasted with an argument that has a distant, positive pay-off. To take advantage of loss aversion, health plans may want to develop this type of message: Our health portal is part of your benefits and we don’t want you to miss out on all the great things it has to offer.
- Social norming. This principle focuses on the “herd mentality” or “bandwagon effect” – that is, people have a desire to behave in the same way as their peers. Health plans can amplify the bandwagon effect through their campaigns. For example: Many of our members have found our nurse coaching program very helpful. You may too.
- Hyperbolic discounting. This concept is used commonly in sales. A product or service is offered for a short period of time, after which the offer is gone. Hyperbolic discounting focuses on the fact that the offer will not last long, so action must be taken now. In the context of health, a plan might tell diabetic members: We have a limited number of free kits to sent to members to help them manage their blood sugar on a daily basis. Would you like one, before they are no longer available?
Sorting through healthcare information and making decisions can often feel overwhelming to members. Health plans can help by developing persuasive communications and engagement programs. Incorporating behavioral economics into the messaging of those campaigns is a great way to create “choice architectures” that steer members in the right direction.