How Behavioral Economics Can Produce Better Health Care

Behavioral economics helps explain why doctors and patients often act through habits, environmental cues, and defaults rather than through purely rational calculation. The article uses studies on smoking cessation, weight loss, exercise, end-of-life choices, and medication adherence to show how small changes in framing and incentives can change outcomes.

Reading notes

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• Doctors may choose a default medication, wash hands more when prompted by a patient-focused poster, and change practice more when shown what colleagues do.
• Human decision-making often departs from pure rationality and is shaped by emotions, identity, environment, and how options are presented.
• People tend to stick with default options, react more strongly to losses than to gains, favor immediate rewards, and can be overwhelmed by too many choices.
• Behavioral economics is being explored in health care because medical decisions involve uncertainty, complexity, and emotion.
• Dr. Kevin Volpp leads randomized trials on nudging doctors, improving medication adherence, and helping consumers choose better health plans.
• In a CVS Caremark study, both reward and deposit incentives helped employees quit smoking more than usual care, and the deposit program worked best at producing quit rates.
• In weight-loss and exercise studies, deposit contracts and lottery incentives improved results more than control groups, and an upfront payment with later deductions helped people reach walking goals.
• In advance directive studies, patients were more likely to choose comfort care when it was the default option, and less likely when aggressive care was preselected.
• Blue Cross Blue Shield of Massachusetts is using peer comparisons and bonus payments for continuous improvement, and in Hawaii it is testing joint incentives for diabetes care.
• The startup Wellth rewards medication adherence with immediate tangible incentives, using reminders, selfies, deductions, and calls to build habits after hospital discharge.
• The article concludes that a fuller view of human behavior may make medicine more effective because health is shaped by many daily choices made by doctors and patients.