Have you ever sworn off fast food, only to sneak a fry from your kid’s plate when she looks the other way? Or realized you still haven’t enrolled in that 401k plan even though you promised yourself you would? Sure you have, we all have.
As common as these problems are, they’re actually pretty odd when you think about it. We tend to see ourselves as rational human beings who make decisions consistent with our own self-interests, but these are two examples of how we often make choices each day that are at odds with what we actually want for ourselves.
While government agencies rely on economists to analyze historical trends and help design policies that consider both intended and unintended consequences, economists can’t always predict how even the most rational people will respond to policies or incentives.
That might be a job for behavioral economists. Behavioral economics goes beyond simple incentive structures and examines the complex psychological, social, and cognitive factors that impact human decision-making. Through an understanding of these factors, behavioral economists develop theories about human behavior, run real-world experiments to validate their hypotheses, and offer up policy solutions.
The British Parliament was the first national government to formally recognize practical applications of behavioral economics by establishing a Behavioral Insights Team (BIT). The idea was to compel people to do things, such as pay their taxes on time or show up for scheduled medical appointments. Indeed, the field of behavioral economics is likely ripe with applications for health care.
Our recently published Mindful Medicaid report explores why expectant mothers sometimes fail to get the pre- and post-natal care they know they need. Collectively, Medicaid programs across the country cover roughly half of all childbirths and 40 percent of children, which makes the program uniquely positioned to try and promote pre-and post-natal care that will lead to improved health outcomes at lower costs. But how?
We focus on three areas in which behavioral concepts could be leveraged to promote maternal and child health within Medicaid programs:
- Messaging. Communications that leverage positive peer pressure (or social proof, as behavioral economists like to call it) can be effective at getting soon-to-be moms to quit smoking. The Louisiana Department of Health has already caught on to this concept. It has teamed up with the 2Morrow Inc. smoking cessation app, , which regularly sends soon-to-be parents success stories about people who, under similar pressures, were able to quit smoking to achieve their goals. Though it is still early, the initial results have suggested that the behavioral-based strategies of SmartQuit are more effective than alternative smoking cessation apps.
- Choice architecture. Behavioral science reveals that people are more likely to stick with a default (the result you get if you choose to do nothing) than they are to actively make a new, alternative choice. So why not make the default the best option? There is evidence that automatically booking people for vaccination appointments increases vaccination rates. States could auto-book children and expectant moms for vaccine appointments in order to increase vaccination rates.
- Program tools. It might sound simple, but sending out text reminders and having people make formal commitments (to themselves and to others) could go a long way to improving maternal and child health. Findings from behavioral economics show that detailed, personal commitments (or implementation intentions) have increased the rate at which unemployment beneficiaries in the UK have returned to work.
Another study, in Kenya, indicates that making commitments to others (or social commitments) were the most effective approach at getting people – even those with the most limited financial resources – to save money. Commitment devices and reminders are effective program tools and can be used to nudge expectant mothers to attend pre-natal appointments and stay healthy during their pregnancy. They can also encourage parents to bring their babies in for well-baby visits.
For program directors and MCOs looking to apply these insights to their Medicaid population, we suggest these steps:
- Develop a hypothesis. Where do you believe your program is falling short? If it’s the message, consider a more socially driven communication.
- Establish evaluation measures. Whatever initiative you settle upon, test it. Collect quality data and rigorously evaluate its effectiveness.
- Revise accordingly. Did the test produce positive outcomes? If not, test another hypothesis. Maybe this time look to improve the choice architecture.
A rich body of evidence is developing to inform Medicaid programs about which nudges resonate most. For Medicaid programs that effectively leverage these behavioral principles, the potential payoff is significantly better health outcomes at lower cost.
Learn more about behavioral economics from our Deloitte University Press collection.