The Behavioral Economics of Health and Health Care

Abstract

People often make decisions in health care that are not in their best interest, ranging from failing to enroll in health insurance to which they are entitled, to engaging in extremely harmful behaviors. Traditional economic theory provides a limited tool kit for improving behavior because it assumes that people make decisions in a rational way, have the mental capacity to deal with huge amounts of information and choice, and have tastes endemic to them and not open to manipulation. Melding economics with psychology, behavioral economics acknowledges that people often do not act rationally in the economic sense. It therefore offers a potentially richer set of tools than provided by traditional economic theory to understand and influence behaviors. Only recently, however, has it been applied to health care. This article provides an overview of behavioral economics, reviews some of its contributions, and shows how it can be used in health care to improve people's decisions and health.

Impact of Provider Incentives on Quality and Value of Health Care

“…These shortcuts are usually effective (42) but can sometimes lead people astray, resulting in damaging cognitive biases or systematic departures from predictable rational economic behavior ( Table 1). Because incentive schemes rely on providers responding in predictable and rational ways, understanding cognitive biases offers both an explanation for the failings of previous incentive schemes and a potential framework for designing more effective schemes in the future (75).…”

The Eye of the Beholder: A Discussion of Value and Quality From the Perspective of Families of Children and Youth With Special Health Care Needs

“…Recent work in behavioral economics has shown that shopping for health insurance is an unpleasant task, with imperfect information, and many people avoid it if possible, even if they are in a plan that does not meet their needs or a more affordable option is available. 29 Noted health economist Uwe Reinhardt has compared using the US health care system to walking into a department store blindfolded and months later being handed a statement that says, "Pay this amount." 30 The titles of popular press articles indicate some of the issues: "Revealing a Health Care Secret: The Price" and "Shopping for Health Care, A Fledgling Craft, " for example.…”

‘We didn’t have to dance around it’: opt-out HIV testing among homeless and marginalised patients

“…The framework integrates concepts from Behavioural Economics (Rice 2013), the foundation for the default-based (opt-out) study intervention; the Health Belief Model, to explore possible relationships between the participants' beliefs about HIV and their testing practices (Rosenstock 1974); and Normalisation Process Theory, a guide for implementation of opt-out HIV testing at the operational level (May 2013).…”