At the beginning of last week’s HIMSS18 conference in Las Vegas I attended the symposium on Digital & Personal Connected Health. One of the speakers, David Asch from the Penn Medicine Center for Health Care, reported on innovations in Digital Health driven by behavioral economics. Adoption of and engagement with new technologies in healthcare is often lagging behind other industries. Wearables disappear in drawers and new apps struggle to attract and retain users. The average app loses 77% of users after three days and 90+% within a month.

David Asch is also on the Scientific Advisory Board of VAL Health, a consultancy firm with the goal to apply behavioral economics to improve health and health care. In one of the whitepapers from this site the authors explain their approach:

Unlike conventional behavior change approaches that presume people always act in their best interests, behavioral economics recognizes that people are often irrational, yet in predictable ways. In understanding why we make unwise decisions, behavioral economists design solutions that account for and course correct our decision errors.

The insight that people often behave irrationally, but in predictable ways, was illustrated in Dan Ariely’s popular book “Predictably Irrational“. At the root of this seemingly perplexing behavior lie numerous cognitive biases which distort our perception of the world and hence lead us to act in irrational ways. Some examples are recency bias, hindsight bias, overconfidence bias, or status quo bias. A fascinating visualization can be found on the Cognitive Bias Wikipedia Page:

Back to VAL Health’s whitepaper: They list three main tenets of behavioral economics used to improve health outcomes:

Choice architecture refers to setting up a list of choices in such a way that the above biases tend to lead to good outcomes. For example, people tend to get overwhelmed when provided with too many choices, and most people like going with a default choice. The impact of this on public policy was also discussed in great detail in the book “Nudge: Improving Decisions About Health, Wealth, and Happiness” by Richard Thaler and Cass Sunstein. A simple example would be whether a policy automatically enlists people in organ donor registries with the option to “opt-out” or requires them to specifically “opt-in”: Most people go with the default, so it’s easy to see how the choice architecture of public policy will have a big effect on the outcomes.

Framing refers to how alternatives or choices are presented. We often perceive options differently based on how they are framed, even when their probabilities are exactly the same. This is closely related to the concept of loss aversion, the idea that we experience greater pain in losing than pleasure in gaining a given amount. For example, people respond or engage more to avoid losses than to realize gains:


David Asch mentioned this loss aversion as an example in this interview snippet on HIMSS TV, which also touches on the subject of Financial Incentives: When people are given a reward of say $2 / day for one month for each day they reach an activity goal (say walking 10,000 steps), this has only a small and usually quickly decaying impact. However, when people are given the entire amount upfront ($60 for 30 days) and then lose $2 for each day they don’t reach the activity goal, they engage at a significantly higher level. This difference seems surprising, given that the incentive is exactly the same. However, people dislike losing more than they like gaining.

The whitepaper goes into more detail on how knowledge of these biases and the right framing and incentive instruments have been used to improve engagement levels:

I encourage you to download the whitepaper(s) from the VAL Health website to learn more about the details of this work.

All that said, incentives and especially financial rewards are seen as a short-term stimulus or fix. In order to affect lasting behavioral change one needs to achieve habit formation, i.e. the behavior needs to become an ingrained routine which will persist even in the absence of rewards.

Much has been written about how many repetitions or how many days (60+) one needs to form new habits and how to build habit-forming products (See “Hooked” by Nir Eyal). This also touches on the concept of Gamification, i.e. to make ongoing engagement enjoyable like a game, if not addictive. For example, by awarding badges for frequent use a product can appeal to the desire to collect badges for recognition. Or by displaying streaks of uninterrupted goal achievement a product can appeal to the desire to extend a streak.

In summary, behavioral economics starts with the observation that people often behave irrationally, but in predictable ways. It then studies the reasons for such irrational behavior – the cognitive biases. Such insights can and should be systematically applied to the design of health care products, forms, apps, etc. that exploit our behavioral tendencies to achieve better health outcomes.

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