When it comes to healthcare, it is all about the individual, not their condition. Healthcare organizations endeavor to help patients achieve better health, and this goes beyond reducing symptoms and healing injuries.
Behavioral economics—a science that was founded on the idea that “humans are irrational beings, but in highly predictable ways”—is empowering individuals to live healthier lives through programs that guide better decision making and create long-term healthy habits with the following three key principles:
Principle One: Understanding the human element of healthcare with the intent-behavior gap
Have you ever set your alarm to get up early, and then pressed the snooze button… multiple times… missing your morning workout?
If so, you know that achieving better health is easier said than done.
The disconnect between the healthy choices we want to make, and the instantly-gratifying choices we actually make, is called the intent-behavior gap, and it’s one of the key principles driving the science of behavioral economics.
Recognizing that we do not always follow through with our intentions, behavioral economics works to effect change through healthy habit formation. As the right choices become routine habits, it gets easier to match intentions with behaviors for better long-term health.
Principle Two: Overcoming present bias through financial incentives
Behavioral economics explains that we are all subject to present bias, the instant, tangible gratification that often drives basic human motivation. This bias leads us to prioritize immediate desires over things that will be best for us in the long run. As such, present bias is what causes us to order that dessert when we eat out with friends, or lures us to stay seated on the couch, binge watching a sub-standard reality television show when we told ourselves we were going to read.
Because what we want now often overshadows our ultimate goals, offering immediate rewards for making long-term healthy choices can motivate individuals in overcoming present bias and do what is required to be healthy, whether that’s checking glucometer readings regularly, exercising, or taking medication as prescribed.
Principle Three: Leveraging loss aversion to maximize results
If you have ever owned stocks or investments, chances are you are familiar with loss aversion, even if the term sounds unfamiliar. Imagine, your investment portfolio shows significant 15-20% growth across investments over the past year, but one of your investments dropped 10%. Are you focused on all the money you made, or walking away wondering when you could have sold that last stock to avoid a loss?
Loss aversion describes the human tendency to prefer avoiding loss, rather than gaining an equivalent amount. In other words—losing $100 feels worse than gaining $100 feels good. This means that, while traditionally structured incentives programs can be effective in changing patient behavior, they leave significant room for improvement.
Leveraging these three key principles of behavioral economics can support and empower patients to better health, resulting in positive, lasting impacts and outcomes. Learn more about behavioral economics and how Magellan Rx Management and Wellth are partnering around this concept.