Director of Consumer Engagement
You may be surprised to learn that for nearly three decades, social scientists have been quietly engineering ways to help us live happier, healthier, and more productive lives. Every day, their work subtly influences many of the choices we make – the food we snack on; purchases we make; reducing our risk of injuries and accidents; even reminding us to take our medications.
Whether we realize it or not, we’re exposed to discrete suggestions known as “nudges” that influence our decisions. The science behind these suggestions is called “Behavioral Economics”
What is Behavioral Economics?
Traditional economics holds that people make rational decisions and serve our self-interests. The problem is that people aren’t entirely rational decision-makers. We make mistakes. Often, the choices we make offer short-term benefits that may not be good for us in the long run.
Behavioral Economics (“BE”) takes our flawed behaviors into consideration. Practitioners of BE argue it offers more accurate insight into human decision-making because BE combines psychology with economics to explain how real people make choices. (Lambert 2006)
Making Desired Outcomes More Attractive
BE offers marketers powerful tools to influence the choices we make. For example, the way a choice is worded can highlight either its positive or negative aspects. That “frame” can have a big impact on the action we ultimately take. (Samson 2014)
A Healthcare Nudge Example
Imagine you have a bad sinus infection. It’s Thursday at 8 pm. You’re about to go to the emergency room because you can’t stand the sinus pain, congestion, and you’re tired of not being able to sleep. But just as you’re about to leave, you see a reminder in the form of a sticker on the back of your cell phone prompting you to call the 24-hour free Nurseline. You’re being nudged. You decide to talk with your health insurance provider’s Nurseline to see if you should go to the ER. The nurse explains your choices using carefully-worded framing of your options. The nurse suggests home treatment to relieve your discomfort and offers you the following advice:
You can be seen by your regular doctor tomorrow morning for the care you need, and you’ll only pay a $20 copay.
You can go to a busy and crowded ER now to be seen by an ER doctor. The nurse reminds you that you may not be discharged for 2 – 4 hours. That will get you back home after midnight. Also, you’ll pay a $500 copay, plus any balance you may be charged by the doctor or hospital.
How Do These Nudges Work?
First, there is a convenient visual cue, the sticker on the back of the cell phone, that acts as a reminder that there is a free, immediate, reputable, and intermediate option to follow for health advice – the Nurseline. This diverts the choice, even if temporarily, to an alternative and potentially more appropriate care path.
Second, once the call is made, two options are provided by the nurse. Option B is called “loss aversion” because it is framed as a loss of significant time (“2 – 4 hours”) and money (“$500”). This is a powerful nudge because even though you may feel horrible, you (and everyone else) will likely expend more effort to avoid the pain of losing time and money.
What else is going on in this nudge to make it so effective? The nurse negatively framed the ER experience by using negative words to describe the experience, such as “busy” and “crowded” and reminding you that you’re probably going to spend up to 4 hours there. That conjures up an unpleasant association.
Loss Aversion and Negative Framing
Combining loss aversion and negative framing can produce a powerful nudge because our past negative experiences trigger strong emotional memories. As previously noted, humans inherently do not like losing or spending more money than might otherwise be required. As a result, you’re more willing to risk feeling miserable all night to save $480 and 4 hours at the ER.
The Power of Nudges in Changing Behavior
If the nurse hadn’t reminded you of the cost and time savings involved, you may well have gone to the ER for what is considered an avoidable visit. Avoidable visits are defined as when a person chooses a healthcare option that may not deliver optimal care and is more expensive than alternatives. Why? Most people, when suffering pain or discomfort want immediate gratification and may not act as rationally as they might when feeling better.
Nudges like these help us overcome the “mindless, passive decision-making” we often exhibit when we’re sick and just want to feel better. Carefully timed nudges (i.e., when we need care) combined with visual cues (i.e., phone stickers or refrigerator magnets) make it easier for people to make a more rational decision. (Thaler, Sunstein 2009)
The key message is that the way nudges are presented combined with certain visual cues can make the “best” choice more desirable amongst other options. What’s more, effective nudges don’t force us to change, rather they subtly push us to be more rational in our decision-making. By being exposed to the nudge, we’ll be more likely to exhibit the desired behavior.
Lambert, Craig. 2006. “The Marketplace of Perceptions.” Harvard Magazine, 50.
Samson, A., Ed. 2014. The Behavioral Economics Guide 2014. (With a foreword by George Lowenstein and Rory Sutherland). (1st ed.).
Retrieved from http://www.behavioraleconomics.com ,17
Thaler, R.H., Sunstein, C.R. 2009. Nudge: Improving Decisions About Health, Wealth, and Happiness. Penguin Books. 33-35.