The Impact of Behavioral Economics on Health

SUMR Blog

The Impact of Behavioral Economics on Health

What I Learned from AcademyHealth

At the annual AcademyHealth Research Meeting in Minneapolis, I was exposed to cutting-edge research in behavioral economics. I attended the session “Behavioral Economics and Health,” with Dr. Kevin Volpp, director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania, as the chair.

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SUMR Scholar Rathnam Venkat is a rising sophomore at the University of Pennsylvania where he is pursuing a degree in Economics.

The basis of behavioral economics is rooted in the fact that 1/3 of all deaths in the United States are from “modifiable behaviors,” or behaviors that can, with substantial effort, be changed. You can read more about Dr. Volpp and the work done at the Center for Health Incentives and Behavioral Economics here.

Dr. Volpp explained that, according to behavioral economics, people are “predictably irrational,” and thus incentives can have a large impact. After working with Dr. Mitesh Patel, an LDI Senior Fellow, to explore incentives designed to motivate people to exercise, I had some background in the field. Dr. Patel and I analyzed both the efficacy of the Moves App as well as people’s response to incentives to use the app. However, the panel at AcademyHealth opened my eyes to the broader range of opportunities to use behavioral economics to improve health care.

More specifically, the panel highlighted ways in which behavioral economics is being used to improve chronic disease management and patient engagement. For example, the panel discussed how some insurers are lowering premiums for wearing devices such as a Fitbit to track one’s activity. Moreover, Dr. Volpp discussed how behavioral economics, sometimes coupled with new devices, is being used to solve the 5000 hour problem. The problem arises because doctors only see patients for a few minutes each year, which offers limited opportunities to help patients change their behavior in the other 5000 hours. Dr. Volpp gave an example of a scale that records a patient’s weight every day and immediately transmits the information to a server, where a program evaluates the patient’s behavior and rewards the patient with a direct deposit into his or her account.

After attending the AcademyHealth research conference, I realized the potential of using behavioral economics to improve health. The simple concept of people responding to incentives has far-reaching implications in health care. Incentives can encourage people to spend less, thereby slowing down the growth in health care spending, while also motivating people to change their habits to be healthier in the long run.