Archive for October, 2009
October 30th, 2009 by Eric Ferguson
As an editor for the Corporate Database team, Eric Ferguson is responsible for writing and editing strategic language for Express Scripts' Sales & Marketing department.
Some thoughts on Halloween before I get fitted for my Zombie Ron Burgundy costume:
On what other day would you willingly and joyfully give away candy to kids – beggars, really – dressed as all manner of ghost, ghoul, and commercially licensed intellectual property? If I trick-or-treated on March 18, would you give me an allegedly “fun size” Snickers bar? Of course not. Not just because I’m an adult, but because no one else would give me candy either. Social norms dictate, however, that you give candy to a kid with a massive head wound if she says the magic words on October 31.
It seems to me that trick-or-treating is the first job that most of us have. Sure, it’s only one day a year, but kids put forth the effort to get dressed, make the commute, and cold call perfect strangers. They get paid (in candy or, cruelly, all manners of non-candy including fruit and pencils) and then experience the indignity of losing some of that income to “the man” – in this case, parents with the misguided notion that they deserve a piece of the action . Some kids are good at saving their candy for later, while others blow through it in one night and then instantly regret it. I fell into the latter group and, in some ways, still do.
For kids and a fair number of adults, candy equals currency*. There are different denominations, but these vary by person. Here’s my personal value structure:
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Pennies – Smarties, Jolly Ranchers, individually wrapped bubble gum, etc.
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Nickels – Three Musketeers, Starburst, Tootsie Rolls
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Dimes – Reese’s Pieces, Twix, M&Ms
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Quarters – Tootsie Pops, Peanut M&Ms, Milk Duds
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Dollars – Snickers, Twizzlers, Skittles, Pay Day
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Priceless – 100 Grand, Reese’s Peanut Butter Cups
When kids negotiate trades, they’re engaging the market. The endowment effect, loss aversion … it’s all there when you debate whether to deal your Jujubes for a Whatchamacallit.
* Some candy has no value. Almond Joys are the equivalent of a wooden nickel.
Tags: Behavioral Economics, Hyperbolic Discounting, Loss Aversion, Social Norms
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October 26th, 2009 by Julie Adelsberger
Julie Adelsberger — Senior Manager; Express Scripts — As senior manager of knowledge management, Julie Adelsberger is responsible for translating scientific research into accessible communications for plan sponsors and other healthcare stakeholders.
Today’s Washington Post explores whether a health insurance mandate is likely to succeed:
[T]he question of whether people will follow a government order that they carry health insurance — an issue that will help determine whether universal healthcare is a success or costly failure — will depend on more than the penalty they would pay for refusing, many economists say. This, they say, is the lesson of behavioral economics, a school of thought that holds that people do not necessarily make decisions out of well-reasoned self-interest. It is an approach that has gained a powerful foothold in the Obama White House.
Many factors will come into play, the experts in the article say: complexity of the law, hassles associated with compliance, the program’s choice architecture, the success of social norming campaigns, and timing and severity of consequences for noncompliance.
For the full article, click here.
Tags: Behavioral Economics, Choice Architecture, Design, Healthcare Reform, Procrastination, Social Norms
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October 22nd, 2009 by Eric Ferguson
As an editor for the Corporate Database team, Eric Ferguson is responsible for writing and editing strategic language for Express Scripts' Sales & Marketing department.
I love NPR. I love the hushed tones of level-headed discussion. I love the tinkly incidental music of “This American Life.” I’d even love “A Prairie Home Companion” if it were a completely different show hosted by someone not named Garrison Keillor. Yep, NPR is almost perfect.
But just when I start to think that I should go ahead and put a ring on it, the dreaded pledge drive strikes. All of a sudden, after months of free content, they pull a switcheroo and ask me for money! The nerve …
It’s different with other charities and nonprofit organizations. You don’t get the Girl Scout cookies unless you pay for them. You don’t really get anything for your United Way donation, but you’re not taking anything either. NPR gives you the milk for free and then asks if you’d like to buy the cow — they’ll even throw in a coffee mug for your trouble.
And what happens if I don’t toss a nickel or two in the proverbial guitar case? Nothing. I still get to listen as much as I want. They won’t send me a bill. They have no leverage here. Their only ammo is an appeal to my sense of fairness and civic duty. Good luck with that.
So why do I donate? Social norming might come into play. Maybe I donate because other NPR listeners do — at least, that’s what I’m forced to assume based on the phones ringing in the background. (Side note: Where else do phones “ring” anymore?)
The fundraising shills also do “challenges” to try to get listeners to donate: “Joe and Jane Doe will donate $X if we raise $Y in the next hour.” But what do I care if they don’t hit their goal? I doubt Joe and Jane would really withhold the money if the station fell a little short.
And another thing: After I’ve decided to donate, how do I decide how much? I could give as little as a penny or as much as the dozens of dollars in my bank account. Does my brain use some bizarre guilt-to-dollars conversion chart to determine the appropriate amount?
I don’t know the answers here — it might just be that I listen to NPR because I’m the type of person who will give away money for no good reason.
Tags: Behavioral Economics, Social Norms
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October 21st, 2009 by Julie Adelsberger
Julie Adelsberger — Senior Manager; Express Scripts — As senior manager of knowledge management, Julie Adelsberger is responsible for translating scientific research into accessible communications for plan sponsors and other healthcare stakeholders.
Bob wrote last month about Richard Thaler’s opinion piece on organ donation in The New York Times. In that article, Thaler called on Steve Jobs, CEO of Apple, who received a lifesaving liver transplant this year:
The private sector could help create other simple methods [for donation registry]. Here is a challenge to Mr. Jobs: Why not create a Web site — and a free app for the iPhone — that lets people sign up as organ donors in their home states?
Now the Nudge blog reports that this application exists:
Steve Jobs didn’t meet Thaler’s challenge, but Raymond Cheung of Serenity Integration did. “Basically, I was inspired after reading Dr. Thaler’s column,” he tells the Nudge blog. So he directed his team of developers to create an iPhone app called Donate Lives that lets users identify where they live, and then takes them directly to the state web site where they can sign-up to become an organ donor.
Tags: Behavioral Economics, Choice Architecture, Design, Nudge
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October 20th, 2009 by Julie Adelsberger
Julie Adelsberger — Senior Manager; Express Scripts — As senior manager of knowledge management, Julie Adelsberger is responsible for translating scientific research into accessible communications for plan sponsors and other healthcare stakeholders.
The New York Times reports on a study that used social norming to encourage proper hand washing in highway service station restrooms. The research, conducted in Britain, found that certain messages resonated better with men and others with women — but that even the most effective messages increased the use of soap only modestly.
For the full story, click here.
Tags: Behavioral Economics, Social Norms
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October 16th, 2009 by Bob Nease
Bob Nease, PhD — Chief Scientist; Express Scripts — is a leader in the convergence of behavioral economics and healthcare; at Express Scripts, he is responsible for advancing the understanding of consumer behavior. To this end, he closely follows emerging science around human behavior and decision making, then works to develop tools and communications that help plan sponsors enable better health and value.
The New York Times reports on an audio nudge to reduce injuries from electric vehicles:
Safety experts, worried that hybrids pose a threat if pedestrians, children, and others can’t hear them approaching, want automakers to supply some digitally enhanced vroom. Indeed, just as cellphones have ring tones, “car tones” may not be far behind — an option for owners of electric vehicles to choose the sound their cars emit.
Tags: Behavioral Economics, Design
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October 14th, 2009 by Eric Ferguson
As an editor for the Corporate Database team, Eric Ferguson is responsible for writing and editing strategic language for Express Scripts' Sales & Marketing department.
Show me a writer who has never stared blankly at a computer screen while waiting for the first bolt of inspiration to strike, and I’ll show you a plagiarist. Writing anything – a poem, a novel, a glib blog* filled with asterisks and digressions – is hard, thankless, ego-crushing work. With so many more enjoyable ways to spend your time, it’s a wonder anyone writes anything. (Even now, I’m fighting the urge to take an impromptu lunchtime trip to Guitar Center.)
So what are writers to do? Well, they can Write or Die. As you might guess, WoD is pretty much the polar opposite of thefuntheory.com (discussed in this space yesterday). Rather than combating hyperbolic discounting with some attempt at amusement, WoD is all about consequences. I’ll turn it over to WoD’s evil genius, Dr. Wicked:
Write or Die is a web application that encourages writing by punishing the tendency to avoid writing. Start typing in the box. As long as you keep typing, you’re fine, but once you stop typing, you have a grace period of a certain number of seconds and then there are consequences.
Many people find themselves unable to write consistently. I believe that this is because their reason to write is intangible. For instance, I want to write and finish a book because I want to be published and make a living as a writer. That goal is a long way away so I often find it difficult to sit down to the task of writing.
To give people a tangible reason to write, WoD features three consequence modes. In the wimpiest mode, a politely worded text box appears and encourages you to keep writing. In the not too hot/not too cold mode, you hear an annoying sound until you resume. In the harshest mode, the words that you already have written disappear.
It’s a twisted application of loss aversion, emphasizing people’s dislike for negative consequences more than their desire for rewards. Writers are a fairly warped lot, so it makes some sense for them … but the healthcare industry probably shouldn’t take its cues from someone named Dr. Wicked.
* Those two words side-by-side don’t look like English, do they?
Tags: Behavioral Economics, Hyperbolic Discounting, Loss Aversion
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October 13th, 2009 by Julie Adelsberger
Julie Adelsberger — Senior Manager; Express Scripts — As senior manager of knowledge management, Julie Adelsberger is responsible for translating scientific research into accessible communications for plan sponsors and other healthcare stakeholders.
At thefuntheory.com, Volkswagen leads an exploration of how to change behaviors with a little fun. Like the Wii, the approaches here counteract hyperbolic discounting, telescoping future benefits into the present by making should-dos enjoyable in the here and now. The end goal: Encouraging people to change their “behavior for the better” with more exercise, recycling, picking up after pets, and so forth.
The site is also running a Fun Theory Award Contest through mid-November, where the public can submit ideas on how to change behaviors with some joy.
Tags: Behavioral Economics, Hyperbolic Discounting
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October 12th, 2009 by Bob Nease
Bob Nease, PhD — Chief Scientist; Express Scripts — is a leader in the convergence of behavioral economics and healthcare; at Express Scripts, he is responsible for advancing the understanding of consumer behavior. To this end, he closely follows emerging science around human behavior and decision making, then works to develop tools and communications that help plan sponsors enable better health and value.
I recently spent the weekend in California with my wife, sister-in-law, and niece. My in-laws have a Wii gaming console, of which I’ve heard but never played. Suffice it to say that in 24 hours time, I played more video games than in the past 24 years of my life.
As most of you know, Nintendo ate away at the bottom of gaming by introducing a controller that allows novice gamers to quickly engage in games. Very few buttons are used; most of the action is controlled by moving your arm(s) around. This makes it accessible to millions of Americans (many of them parents of kids who play video games) in short order.
But what I found most interesting about the Wii games we played is that they’re all sports: bowling, tennis, golf, and boxing, plus various exercises from Wii “Fit.” Unlike every other video game I’ve played, no one was sitting; we were all up and moving around. (I was moving around a bit too much; during my first go at tennis I landed a nice backhand in my niece’s back.)
I realized that Nintendo (knowingly or not) is leveraging hyperbolic discounting in a couple of ways. The first is the most obvious: The upfront learning curve needed to enjoy a video game is drastically flattened. The second is that because the controller advantages physical movement and the games are fun, exercise becomes attractive in the here and now.
This latter feature is significant. Most health behaviors involve an upfront cost for a downstream benefit. Hyperbolic discounting significantly attenuates those benefits, leaving us staring face to face with just the downsides. Anything that decreases or offsets upfront costs will have an outsized effect. For some behaviors (e.g., moving from a retail pharmacy to Home Delivery), others can help. (For example, Express Scripts can help members by contacting their physicians on their behalf to reduce the effort required to move prescriptions to Home Delivery.)
With exercise, however, it’s a real challenge to outsource the sweat. But technologies like the Wii may change the equation: By making real exercise fun more quickly than “real” life allows, the balance could quickly swing toward greater exercise. As the technology improves, it’s not hard to imagine faster, more sensitive and discriminating sensors that more closely match the player’s movements. Novice players’ movements might be “shaped” a bit so that they enjoy rewarding performance quickly but are constantly challenged to improve.
If you think video games are for couch potatoes, think again. I do about 45 minutes of cardio a day; here’s a clip of my wife and I boxing. It’s a decent workout… and it will only get better.
Tags: Behavioral Economics, Hyperbolic Discounting
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October 9th, 2009 by Bob Nease
Bob Nease, PhD — Chief Scientist; Express Scripts — is a leader in the convergence of behavioral economics and healthcare; at Express Scripts, he is responsible for advancing the understanding of consumer behavior. To this end, he closely follows emerging science around human behavior and decision making, then works to develop tools and communications that help plan sponsors enable better health and value.
Following the success of our D.C. Ignite symposium, we’re holdingtwo regional events this month to continue discussion on the convergence of behavioral economics and healthcare. The first, on the Stanford University campus this week, drew 66 attendees and generated lively discussion about the challenges of engaging members in their benefit programs.
Key takeaways from the event include:
Without behavior change, there is no real healthcare reform
The United States spends more money as a percentage of gross domestic product on healthcare than peer countries such as Canada and the United Kingdom, yet our health outcomes don’t measure up — for example, our life expectancy lags behind. Meanwhile, the Medicare system is failing, with costs soaring and bankruptcy looming. Alan Garber — Stanford professor of medicine, general internist, and Center for Cost-Effective Consumerism advisory board member — argues that the time for action is now, before the country faces an emergency that forces dire choices, and that behavior change is a crucial component of healthcare reform.
If you want members to behave a certain way, make it easy now
David Laibson, Harvard professor and Center for Cost-Effective Consumerism advisory board member, shares his experience in improving 401(k) participation rates. He and his colleagues started down the path of rational economics, providing education and communication on the benefits of 401(k) enrollment. When that failed, they tried various default and active choice options, eventually growing participation from about 40% to 80% or higher with opt-out programs. From this specific experience, Laibson offers a generalization: Whatever you want members to do, make it easy now.
Tap the power of latent demand
Most approaches to the pharmacy benefit attempt to change members’ preferred behaviors; we assume they don’t want to use particularly programs and services because they don’t understand the advantages. But Express Scripts’ experience with Select Home Delivery has shown us that many members already prefer the behavior we’d like them to take; they just don’t follow through for some reason (e.g., procrastination, forgetfulness, etc.). The key, then, isn’t sending out more educational materials but modifying programs to tap that latent demand, improving uptake of the preferred behavior without causing any member disruption.
Tags: Behavioral Economics, Garber, Healthcare Reform, ignite09 symposium, Laibson
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