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Behavioral Economics

Helping People Make Better Choices


Policy-makers, employers and others can use the science of behavioral economics to steer people toward wiser choices. The potential result: dramatic improvements in health without limiting people's freedom to do as they please.

An article published in the Nov. 28 issue of the Journal of the American Medical Association (JAMA) details the approach. The paper was written by researchers at Carnegie Mellon University, the University of Pennsylvania, Aetna Inc. and the Philadelphia Veterans Affairs Medical Center.

Poor decision-making on the part of individuals is one of the underlying causes of major health problems in the United States and other developed nations. Tobacco use, obesity and alcohol abuse account for nearly one-third of all deaths in the United States. What's more, the full benefits of many medical advances — such as medication to control blood pressure, lower cholesterol and prevent strokes — go unrealized because people fail to adhere to their treatment.

"We've only scratched the surface of potential applications. The possibilities for using decision errors to improve health behaviors, and thereby improve the health of the population, is enormous," said study author George Loewenstein, the Herbert A. Simon Professor of Economics and Psychology at Carnegie Mellon.

People often miss out on routine but life-saving medical tests simply because they fail to schedule appointments. Health care providers should automatically schedule the next test when the patient comes in for the current test, according to the researchers, who suggest the potential for these approaches to improve health is immense.

They also advocate that some of the up-front costs of incentive programs could be paid by employers or insurers in anticipation of improvements in health and productivity that likely would follow.

The paper was co-authored by Kevin Volpp, a staff physician at the Philadelphia Veterans Affairs Medical Center and an assistant professor at the University of Pennsylvania School of Medicine and the Wharton School; and Troy Brennan with Aetna Inc.

Photo: Professor George Loewenstein.

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