The inconvenient truth about behavioral economics in healthcare

By:

Nov 28, 2017

The Royal Swedish Academy’s award of the 2017 Nobel Prize in Economics to Richard Thaler marks the growing influence of the science of behavioral economics, not only in academia, but in popular culture and industry.

Traditional economics is rooted in the assumption that people make rational, self-interested decisions based on a strict cost/benefit analysis of their options. By contrast, the sub-field of behavioral economics acknowledges that common psychological factors, such as aversion to loss or the desire for fairness, also influence people’s decisions.

In their best-selling, 2008 book Nudge: Improving Decisions About Health, Wellness and Happiness, Thaler and co-author Cass Sunstein explain how natural human biases cause people to make poor decisions. But with knowledge of these biases, we can “design choice environments that make it easier for people to choose what is best for themselves, their families, and their society.” Today, governments and other institutions around the world are trying to do just that.

For instance, studies have shown that broadly speaking, people are more likely to save if the process is automatic. Based on this insight, many companies have helped employees increase savings by automatically enrolling them in company-sponsored retirement savings plans, thereby shifting the burden of action to the process of opting out, versus opting in.

Hopes run particularly high for behavioral economics in healthcare. A recent Commonwealth Fund issue brief asserts that the science might be used to design choice environments that promote healthy lifestyle decisions, medication adherence, appropriate emergency department use, and more. The brief went so far as to suggest that “Behavioral Design Teams” be embedded in healthcare delivery organizations, where they could continually identify and act on opportunities to improve clinical care and its outcomes through application of the science.

The goal of helping people better manage their own health is an important one, given estimates that 40% of our health status is driven by our behavior, and some chronic diseases are particularly sensitive to it. But innovators should be wary of overinvestment in behavioral economics as a means of achieving it.

To date, behavior change initiatives informed by the science, which I’ll call “nudge tactics” after Thalers’ own terminology, have a spotty report card in healthcare. For instance as physician Aaron Carroll highlighted recently in his New York Times piece on Thaler’s prize, they’ve shown promise in reducing missed appointments, as well as promoting weight loss and smoking cessation. But they haven’t cracked the nut on the the colossal problem of medication nonadherence, the cost of which a 2013 Johns Hopkins study sizes at up to $300 billion per year in the U.S.

One could argue that the lack of resounding, consistent success is because the practice of nudging in healthcare is still in its infancy, so we still have much to learn about how to optimize it. Fair enough, and innovators should press on with the exploration. But we shouldn’t expect the practice to become a sweeping solution to the enormous challenge of influencing individual health behaviors.

Nudging in healthcare is rooted in the erroneous assumption that self-defeating health behaviors are necessarily irrational. Carroll himself implicitly makes this assumption in expressing surprise at heart attack patients’ low rates of medication adherence, “even though it makes a big difference in outcomes.”

This assumption ignores the inconvenient truth that people and their lives are complex, so their barriers to healthy behavior are, too. Hence nonadherence and other unhealthy behaviors may be completely rational. And the assumption that they are not can lead innovators to misdiagnose their cause, thus misjudge potential solutions.

For instance, a serious heart attack can leave someone suffering with pain, fatigue, and depression for weeks or more. And anyone who’s suffered a major health trauma knows that medication adherence is only one of many urgent, post-episode tasks and decisions that demand energy, confidence and clear-headed problem-solving at a time when one is often most depleted of such physical, emotional and mental resources.

How will I feed and bathe myself home alone? I can’t drive. How will I get to the pharmacy…and my next appointment…and the one after that? How much will this episode cost me, and how much income will I lose while I can’t work? How do I allocate limited cash between rent, care bills, medication, utilities and other pressing expenses? What information do I need from my various providers to file a health insurance claim, and how do I get it from them? And the list goes on.

In such circumstances, it’s hardly surprising that someone would consistently forget to take important medication. Nor is it foolish that they might prioritize other responsibilities over devising a system to remember. When resources are scarce and every matter is critical, all decisions come with unfortunate consequences.

Behavioral economics can’t reliably explain how this could be so. But the Theory of Jobs to Be Done can. Based on our research of consumer purchase decision-making, it explains that everything we do (including doing nothing) we do for a reason that’s valid to us, even when our behavior may seem irrational to others. That reason is to do a “job”—to make progress according to our own priorities, in a particular set of circumstances.

As Clayton Christensen, Andrew Waldeck and I explain in our recent paper, Jobs Theory can help providers gain a thorough understanding of patients’ circumstances, and hence their true barriers to healthy behavior. This, in turn, facilitates work with patients to design treatments and self-care processes that overcome or work around those barriers.

The application of behavioral economics to healthcare is indicative of an exciting movement to bring new science and technology to some of society’s most serious and persistent problems. As such, innovators should continue to explore its capabilities—but also its limits. Because when it comes to adopting healthy behaviors, it’s not always a nudge that people need. Very often, it’s help eliminating both practical and psychological barriers to healthy behavior in a tough set of circumstances.

For more on innovation in healthcare, see:

How disruption can finally revolutionize healthcare

As Senior Research Fellow for the Christensen Institute, Rebecca’s research focuses on business model innovation in healthcare delivery, including new approaches to population health management and person-centered care.