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Behavioral Economics in the Study of Health and Medical Care

When it comes to improved medical care, behavioral economics in the study of health and medical care can provide powerful insights.

When it comes to improving medical care, there is only so much that advancements in medications, surgical procedures or other treatments can do. The majority of changes and upward outcomes trends rest on patient behavior.

This is where behavioral economics — the science of determining how to influence and guide individual action — comes in. In his talk “Using Economic Field Experiments to Improve Medical Care,” now available for CME credit through AudioDigest, economist John A. List, PhD, discusses using behavioral economics in the study of health and medical care. He highlights methods that can be used to directly alter patient behavior for better health outcomes.

“Intrinsic motivations will not necessarily work,” says List. “People don’t just try hard on their own.”

In many instances, he suggests, implementing the concept of loss aversion — the idea that people are more affected by the prospect of losing something than they are motivated by the idea of gaining something — can be a powerful tool in the journey toward improved medical care.

How Behavioral Economics in Medicine Works

When it comes to economics in the study of health and medical care, List says, it’s important to know when to use tools that are monetary and when to employ those that are not.

Based on his work with insurance provider Humana, he has found that nonpecuniary measures garner the best results initially. For example, when encouraging patients to start taking a needed medication, telling them that the majority of patients with their condition take the drug can be a powerful influencer to change behavior. However, over time pecuniary measures, including gift cards or other small tokens of value, will likely be needed to encourage them to maintain the behavior.


To listen to the full lecture, visit AudioDigest.


Behavioral economics even affects doctors, says Dhruv Khullar, MD, a physician at Massachusetts General Hospital, supporting List’s arguments. He writes in the New York Times that physicians are more apt to prescribe a certain medication if it’s already entered into the electronic ordering system. Providers are also more likely to make practice and workflow changes aimed at improving medical care if they see their colleagues making the same pivots.

“People don’t always make decisions — even hugely important ones about physical or financial well-being — based on careful calculations of risks and benefits,” Khullar argues. “Rather, our behavior is powerfully influenced by our emotions, identity and environment, as well as by how options are presented to us.”

How We Can Incentivize Healthy Behavior

To put individuals on a path to better health, employers are now partnering with insurance companies to incentivize healthier behaviors in their employees. According to the Commonwealth Fund, benefits managers have launched wellness programs that reward healthy activities and penalize unhealthy ones. In some cases, they can charge higher health insurance premiums for employees who smoke, but they can also provide free gym memberships for workers who quit smoking.

In his New York Times piece, Dr. Khullar also highlights a University of Pennsylvania initiative that implemented the loss-aversion strategy List outlines in his lecture. Researchers grouped individuals looking to stop smoking into three groups. The first received pamphlets about cessation, the second received $800 over six months if they quit and the third contributed $150 of their own money with the chance to receive $650 more if they ceased smoking during the time period. Based on results, patients who deposited their own money were five times more likely to quit than those only receiving pamphlets and twice as likely to quit as those in the $800 reward group.

The application of economics in the study of health and medical care can also be used to improve medication adherence. Currently, based on statistics published in Dr. Khullar’s article, one-third of medication prescriptions go unfilled, and only half of patients take their medications as prescribed. These behaviors not only cost the healthcare industry $289 billion annually, but they also lead to 125,000 avoidable deaths.

To improve this situation, Dr. Khullar writes, healthcare startup Wellth has launched an app that gives a monetary incentive to patients who properly adhere to drug regimens. Upon downloading the app, patients receive $150, which they can keep if they submit daily selfies showing them taking their medication. They lose $2 a day, however, if they fail to follow prescription directions.

Still, say List and other experts in the field, while behavioral economics holds a great deal of potential for changing patient behaviors and improving provider-patient engagement, there’s still work to be done to refine the field.

“We don’t know if behavior economics in health is the next big thing. You, therefore, don’t want to put all of your eggs in that basket,” Thomas Rice, PhD, professor of health policy and management at the University of California, Los Angeles told the Commonwealth Fund. “Still, it offers promise because it does provide many important insights and policy implications that cannot be drawn from traditional economic models of behavior.”

Whitney J. Palmer

Whitney J. Palmer

I'm a seasoned reporter, writer, freelancer and public relations specialist with a master's degree in international print journalism from The American University in Washington, D.C. I launched my journalism career as a stringer for UPI on Sept. 11, 2001, on Capitol Hill. That day led to a two-year stint as a daily political reporter in Montgomery County, Md. As a staff writer for the Association of American Medical Colleges, a public relations specialist for the Duke University Medical Center and the public relations director for the UNC-Chapel Hill School of Nursing, I've earned in-depth experience in covering health care, including academic medicine, health care reform, women's health, pediatrics, radiology, and Medicare.

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