What is the role of behavioral economics in healthcare?

Defining behavioral economics

Behavioral economics is not necessarily a healthcare-specific term. According to an article published by the University of Chicago News, behavioral economics was termed by Nobel laureate and scholar Richard Thaler to explain the difference between what a person should do and what they actually do.

"Behavioral economics is grounded in empirical observations of human behavior, which have demonstrated that people do not always make what neoclassical economists consider the 'rational' or 'optimal' decision, even if they have the information and the tools available to do so," the article explains.

In the healthcare space, behavioral economics might explore questions like why people might delay exercise despite its health benefits or forego smoking cessation efforts.

"By asking questions like these and identifying answers through experiments, the field of behavioral economics considers people as human beings who are subject to emotion and impulsivity, and who are influenced by their environments and circumstances," the University of Chicago article states.

"This characterization draws a contrast to traditional economic models that have treated people as purely rational actors -- who have perfect self-control and never lose sight of their long-term goals -- or as people who occasionally make random errors that cancel out in the long run."

Behavioral economics is grounded in three foundational principles: overconfidence, loss aversion and self-control.

Someone might stop their course of antibiotics early because they feel better, despite knowing they need to take the full regimen (overconfidence). They might avoid a diet because they don't want to lose out on the foods they enjoy now for the health benefits they will gain down the line (loss aversion). They might delay a smoking cessation program for the short-term benefit of having a cigarette (self-control).

Behavioral economics terms that affect healthcare

Behavioral economics is a massive subsection of the overall study of economics. To that end, experts have developed language to refer to key concepts and findings, many of which might be helpful for healthcare providers considering behavioral economics in their own practice.

Availability heuristic

People often rely on easily recalled information, not actual data, when assessing outcomes. For example, individuals who recently heard about an adverse reaction to a vaccination might forego the shot despite ample evidence indicating that such adverse reactions are rare.

Bounded rationality

People do not have the cognitive ability, information or time to make the correct choice, potentially because they cannot synthesize new information quickly enough. This leads to making gut decisions that might not pay off in the long-term.

Bounded willpower

People will often choose an option that brings them the most pleasure in the short-term over options that have proven long-term benefits. For example, someone might delay a new diet until tomorrow in favor of continuing with their preferred diet at the moment.

Sunk cost fallacy

People will continue to invest in an ineffective or unfavorable activity because of the heavy investments they have already made. For example, an individual might think they have already spent much of their life as a smoker and that it is not worth quitting now.

Confirmation bias

People tend to look for, assess and remember information that confirms their own perceptions. For both patients and providers, this could lead to selective information-seeking and neglect of more valuable information.

Endowment effect

People tend to value something more simply because they own it. In healthcare, this could mean a patient values their current treatment plans over alternatives that could work better. This is related to the status quo bias, which states that individuals might favor current treatments they use over better alternatives.

Social norms

People's behaviors are often influenced by what they perceive as being normal or socially acceptable among their peers. This could lead some to adopt unhealthy behaviors, but social norms can also be used as a tool to influence healthy behavior change.

Nudging

Nudging is a tool that lets stakeholders use indirect suggestions to reinforce positive behaviors. Appointment reminder text messages can serve as nudges to get patients in for their appointments and wellness checks regularly.

Default bias

People tend to opt for pre-set options. In a healthcare setting, a prechecked box consenting to vaccine receipt could influence an individual to get the preventive service.

Framing effect

People interpret the same information differently depending on how it has been presented. The framing effect is an important concept for practicing motivational interviewing. A patient might absorb the implications of a new exercise plan if it is put in terms that are important to them -- the ability to play with one's grandchildren versus greater life expectancy, for example.

While many of these concepts can lead patients to adopt or maintain unhealthy behaviors, they can also be used as tools to influence healthy behavior change.

Indeed, understanding these concepts has allowed people across a number of industries to adapt their relationships with consumers. For example, displaying fruits, vegetables and other nutritious foods at eye level is a nudge toward healthy food purchasing decisions on the part of grocers.

Although healthcare providers are not necessarily selling health to their patients, they can also adopt behavioral economics principles to tailor their patient engagement efforts.

Behavioral economics strategies for healthcare

Healthcare providers and researchers alike have started to adopt behavioral economics to better understand how they can improve overall outcomes and patient well-being. Specific areas that benefit from behavioral economic principles include, but are not limited to, the following:

• Healthy eating.
• Adoption of digital health.
• Medication adherence.
• Vaccines.
• Physical activity.
• End-of-life decisions.
• Substance use disorder.
• Clinician behavior.

Research has allowed healthcare stakeholders to create patient and clinician engagement strategies, ranging from use of nudges to motivational interviewing.

Use of nudges

Nudges have proven effective in prompting positive behavior change for both patients and providers.

"Nudges are interventions, big and small, aimed at getting people to act in their own best interest," according to an article by consulting firm McKinsey.

The above example of displaying nutritious foods at eye level constitutes a nudge in behavioral economics. It allows for freedom of choice -- the consumer can choose not to purchase the nutritious food -- but it makes it easier to make the healthy choice.

Nudges can be used to drive positive behavior change in both patients and providers. In a 2022 JAMA Cardiology article, researchers detailed a patient- and clinician-facing nudge to initiate statin prescribing. Adding nudges for clinicians within the EHR increased prescribing; prescribing increased further when clinician nudges were paired with nudges to patients via text message.

Nudges can integrate other behavioral economics concepts. For example, researchers at Mount Sinai published a paper in BMC Primary Care about how new signage utilized principles of social norms, saliency, and pledging reduced appointment no-show rates.

The researchers hung signs throughout a primary care practice (saliency) that prompted patients to continue showing up to scheduled appointments. Signs featured statements such as: "We strive to meet your goals… Help us meet ours. All you need to do is show up." The signs also stated that nine in 10 patients attend their scheduled appointments (social norms).

The primary care clinic also issued appointment scheduling cards and asked patients to sign them (pledging).

Combined, these principles proved effective. The visit adherence rate improved from 74.7% to 76.5%, while the visit constancy rate improved from 59.5% to 74.3%.

Motivational interviewing

Motivational interviewing (MI) is a counseling technique used to approach behavior change in the context of an individual's personal goals and needs. In healthcare, a provider might use motivational interviewing to help a patient begin a weight loss plan or more ardently stick to a chronic care management regimen.

When practicing motivational interviewing, the clinician might help the patient identify personal, sometimes long-term, goals that are stymied by unhealthy behaviors. A patient with overweight or obesity might not be motivated to complete a weight loss program because of the clinical benefits, but they might be motivated by the chance to spend more time playing outside with their children.

Healthcare providers should be cognizant of key behavioral economics when practicing motivational interviewing. For example, when practicing motivational interviewing with a patient with substance use disorder (SUD), understanding bounded willpower -- the concept that people will choose short-term gain over long-term benefit -- will help frame motivation efforts, according to a paper on the topic in Experimental and Clinical Psychopharmacology.

Behavioral economics plays a role in healthy behavior changes that require incremental and repeated action. In the SUD treatment example, a patient might struggle to adhere to peer counseling meetings because the individual meeting might not feel impactful and it is difficult to conceptualize the long-term impact of repeated attendance.

Knowledge of these behavioral economics can help tailor motivational interviewing.

"MI has identified four processes by which health providers can engage individuals and create an environment for the exploration of behavior change: engaging, focusing, evoking, and planning," the researchers wrote in the paper. "One of the most effective ways to evoke change language is to evoke personal values and goals that are inconsistent with current behavior."

Through motivational interviewing, healthcare providers can help patients reframe their current behaviors using the lens of behavioral economics -- for example, flagging time spent consuming alcohol versus time spent with family or pursuing one's career. Clinicians can also use motivational interviewing to point out the unexpected costs of some unhealthy behaviors to leverage sunk cost fallacy or bounded willpower to promote behavior change.

Near-term rewards and incentives

Incentive programs have been the cornerstone of many patient engagement programs, especially ones run by healthcare payers and employers. These patient engagement strategies get to the heart of the loss aversion concept in behavioral economics.

As noted above, an individual might delay a new exercise program because exercise is hard despite the long-term benefit of better health. An incentive program offering upfront free gym memberships could provide enough of a near-term gain to counteract that loss aversion, according to researchers at The Commonwealth Fund.

Healthcare stakeholders might tie incentives to other preferred behaviors, like receipt of preventive care or vaccinations, to compel patient behavior change.

However, more research is necessary to evaluate the long-term impact and feasibility of incentives. While data has shown that offering incentives for healthy food purchases or weight loss can drive short-term gains, the data is scant on whether incentives can support long-term improvement.

Default options

Healthcare providers can use default bias to influence patients into healthy behavior change. In many cases, this looks like using an opt-out checkbox or a prechecked option for a certain health behavior.

For example, a clinic might precheck an option to receive this season's flu shot during a regular physical. With the understanding of default bias, the clinic might sway the patient to receive the vaccine because that option has already been selected.

Opt-out patient engagement programs have proven effective. In a 2023 study in JAMA Internal Medicine, researchers found that an opt-out smoking cessation program improved patient engagement. When patients were preenrolled in a smoking cessation program -- meaning they'd have to actively unenroll -- they had higher participation rates than those who had to elect to enroll (78% versus 73%).

That study illustrates the default bias, stating that patients are more likely to adopt a healthy behavior when they are already enrolled or preselected to complete that healthy behavior.

At its core, patient engagement is an exercise in human behavior. By understanding behavioral economics, healthcare providers might enhance their patient activation strategies and ideally compel healthy behavior change.

Sara Heath has been covering news related to patient engagement and health equity since 2015.