What Behavioral Economics Has to Teach Us About Reining in Health Care Costs

"As the crisis of cost containment becomes ever more pressing we need to explore all possibilities."

The Takeaway


 Dominic King, a clinical lecturer at Imperial College London, and coauthors study behavioral change and its application to health care policy. Their recent article, published in Health Affairs last month, recaps a watershed report on behavioral economics originally produced for the UK government. After reviewing the current research and interviewing key scientists and policy makers, they identified nine aspects of human behavior that policy makers should pay attention to in the effort to slow spending. 

1) Source Credibility: Physicians have been shown to believe information from their own professional organizations more readily than the same information from insurance companies. Parents have been shown to heed vaccine advice from their child's pediatricians more readily than the same advice from government officials. Send messages from appropriate sources.

2) Incentives: People are "loss averse" and respond better to the fear of loss than the hope of reward.  Awareness of this cognitive bias has been successfully applied to medication adherence and weight loss programs.

3) Norms: Peer group norms are powerful influences on behavior but they can be mispercieved. Alcohol consumption, for instance, was reduced in one study when educators communicated the actual norms of college drinking to students. They had believed that their peers were drinking much more than they actually were.

4) Defaults: At Vanderbilt University Medical Center setting an electronic prescription default to a generic drug worked better than traditional educational campaigns to get physicians to prescribe generic drugs.

5) Salience: Having salient cost information available to physicians has been shown to decrease the costs of the tests they prescribe.

6) Priming: Environmental factors have significant impacts on choices. Studies find, for example, that children exposed to food advertisements consumed 45 percent more calories than those who weren't exposed. Even simple environmental cues like larger plates increase food consumption.

7) Affect: Emotions play an important role in guiding our decisions. Asking patients to make important treatment decisions too soon after hearing bad news risks putting them at risk for a  response based on transient fear, anxiety, and/or pain, rather a full assessment of the benefits and consequences.

8) Commitments: Self-commitment devices such as pre-paid gym memberships help people boost their willpower. Smoking cessation programs have used this technique with success by having quitters put money into a savings account which is only returned to them if they pass a nicotine-detecting urine test after six months.

9) Ego: Status among our peers is important to us.  Hospitals that do better a providing high-quality, cost-effective services should have their performance publicized and recognized.


The One Minute Summary

Behavioral economics goes beyond the traditional assumption that we are all rational creatures who reliably make choices in our own best interests.  Drawing on psychological research, it looks at the full set of drivers affecting our behavior.  Often these are unconscious emotions, biases, preconceptions and tendencies.  These ideas have already begun to be applied to patient safety efforts, but they could be more widely employed. The authors point out that ethical considerations, making sure that these levers are used to enhance people's critical choice-making rather than reduce it, are crucially important.

Read the Study: Approaches Based On Behavioral Economics Could Help Nudge Patients And Providers Toward Lower Health Spending Growth
By: Dominic King, Felix Greaves, Ivo Vlaev and Ara Darzi