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Time to Apply Behavioral Economics to Behavioral Health Care

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The term “behavioral health” is about just exactly that – human behavior and its healthy alignment with the world. However, ironically, the very industry to improve behavioral health is way behind other industries in changing behavior.

Consider the advertising industry: every day we are bombarded by sales tactics. Commercials on TV, ads on public transit, billboards on highways, grocery store aisle layouts, all of these add up to an all-out assault on our minds. Sometimes the target is our pocketbooks (think about the GEICO commercials); sometimes it is our actions (“smoking kills” campaigns in the 90s and 00s). Today, though, the tactics are more specific, focused, and nuanced than ever.

The old-school way of behavior change was successful because it worked: flashy messages that generated emotive purchase responses (popularized by the Mad Men TV series). Flash is not sufficient today, though. And there is a large research base that has cropped up to support new approaches to behavior change.

Mostly, this research has led us to rethink behavior change in our day-to-day lives, with questions such as:

  • How can I bribe myself to exercise more each week?
  • How can I get my kids to eat their dinner?
  • What should my online dating profile be to be most successful (I’m happily married, so this one does not apply to me, but hopefully you get the point)?

Behavioral economics dictate a different approach

Everything I’ve just laid out above falls into a broad category called behavioral economics – the study of psychological, social, cognitive and emotional factors on economic decisions of individuals and institutions. At its simplest, behavioral economics aims to help explain why people do the things they do.

Where behavioral economics has not yet gone is applying these learnings to behavioral health. It needs to. We must up our game.

We know, for example, that really small, non-monetary rewards can make grade-school students choose to eat dried fruit over a cookie. Before introducing an incentive, more than 80 percent of students choose to eat a cookie when presented with the choice of a cookie or dried fruit. When the same students were given a very small incentive, in this case a pen, a rubber bracelet, or a cheap plastic trophy saying “I Ate Strong,” 8 out of 10 students chose the dried fruit. In another example, some rewards programs at hospitals, nonprofits and employers have shown initial success in motivating people to engage in their care and better health habits, as reflected by the many efforts cited in the Washington Post. Beacon Health Options (Beacon) and companies like it could use approaches like these as another tool to help members stick to their substance use disorder treatment plans, for example. Would simple, non-monetary rewards encourage continued participation in care?

In many Beacon contracts, a key challenge is to find and engage members, to get them to show up the first time for an assessment and the start of therapy. We use the same tools today that we’ve been using for decades: meet the member in the community and (in best-case) use motivational interviewing techniques to help the member see the benefit of engaging in services and encourage him/her to opt-in. We rely on intrinsic values.

If we apply behavioral economics to the same problem, however, we might take a very different approach. We know that participation in employer-sponsored retirement plans (e.g., 401(k)) is not only related to employees deciding they want to save for retirement. Rather, it’s about how the employer sets up the program. Is it opt-in, or opt-out? In one study, opt-in programs captured 26 – 43 percent of employees; when the same companies moved to an opt-out model, 86 percent of employees participated in the sponsored 401(k) plan. So maybe we should change our programs to be more akin to opt-out, rather than opt-in?

Where behavioral economics has not yet gone is applying these learnings to behavioral health. It needs to. We must up our game.

One final analogue to consider over the long-term is the education system. Finland has one of the highest performing primary and secondary school systems in the world[i]. Finland achieved this position through a multitude of activities, but a principal one was to increase selectivity into education training programs at the college and master’s degree levels. The result is one that any economist could predict: selectivity breeds competition, and teachers enrolled in Finnish education-training programs are all from the top 20 percent of their high school classes. The programs in Finland today are as selective as the Massachusetts Institute of Technology[i]. (Note: teachers in Finland make more than teachers in the U.S., but data does not support higher teacher salaries as a determinant of academic performance.[ii])

Less clinical training and more economics training?

To do something similar in the behavioral health system would require increasing selectivity somewhere, and in a market with not enough psychiatrists, perhaps that’s not the best. But maybe we don’t need more psychiatrists. Maybe we need more economically trained social workers and psychologists, who must have very strong academic credentials to be admitted to such a program. If this group became the next generation of behavioral health industry leaders, would that help advance our market? Would they be better managers? Have stronger networks? Recruit more dollars into the system?

What is clear is that relying on peer-reviewed research to chart the course for the direction of the behavioral health industry is not enough. We are compelled to think outside our individual and collective expertise: to bring ideas about human behavior to help those individuals whose behavioral health needs are entrusted to our leadership.

If you want to get really deep into why people do the things they do, you should check out Freakonomics, an economics book from the late 2000s that has morphed into a philosophy, a weekly podcast (you can subscribe at iTunes or on the web: http://freakonomics.com/radio/), and several follow-along books.


[i],[ii] Ripley, Amanda. Smartest Kids in the World. New York: Simon & Schuster, 2013.

5 Comments. Leave new

I have worked within several local provider agencies over the last 10+ years (as an admin) and I have seen where incentives have helped in keeping patients engaged in services.

At one particular agency I worked within, back in 2012, I encouraged the clinical staff to set up a “contest” for their SA groups. I thought about, as children, we tended to work for “rewards” and typically it was by earning stars or points. So, the proposal I presented was for those patients who attended their intensive program… whichever one had the most attendance during each 30 day period… would receive a gift. In that most of our patients were homeless and/or living in shelters… the gift was a gift bag of socks, gloves, lip balm and a certificate of their achievement (it was winter).

The first month; a woman won the gift bag and she had tears in her eyes holding the certificate… said she’d find a frame to put it in because “it’s the only thing I’ve ever won.” She had not missed one day.

So, yes… a incentive does help in keeping some patients in treatment.

Clarence Jordan
October 7, 2015 2:36 pm

I’ve often wonder why we don’t make use of more self-directed care models. The incentive being individual choice in how their health care dollars are spent. More than actual dollars however were other commonalities these programs offer; most notable being “shared decision making,” of which informed choice being the core.

Tom Warburton
October 7, 2015 5:57 pm


I think that you are spot on. It’s time for the behavioral health industry to start thinking outside of the box! Thanks for your thoughts on this!


I agree, we need to re-think our approach toward getting (and keeping) people engaged in their medical and behavioral health treatment. For some time now, I have been telling anyone that would listen that incentives will go a long way in getting and keeping people in treatment. A tangible incentive is especially important when trying to get someone to invest in something as abstract and long term as “recovery” or “good health”. People naturally live in the present, and this is more so for people who are struggling with a health issue, so incentives seems like the logical way to go. I am of the opinion that such incentives should be of a monetary value. Before I get ran out of town, let me explain. I am not talking about a high amount of money, but a small amount that will aid people in buying something that they need/want. This will help them self impose the value of the incentive so the value to the person now outweighs the the amount of money. As loony as some may think this idea may be, just think that an amount as small as $5 to $10 can help a person in need more than we can imagine and be a great way to get and keep people engaged. And lets be honest here, there is already a ton of money being wasted by people never reaching “recovery” or “good health” because of the continued cycling thru engagement, disengagement, and re-engagement.

Robert Feyerharm
October 27, 2015 7:27 pm

Beacon ought to conduct a study to determine if a range of non-monetary rewards increases counseling participation vs. no non-monetary reward. Participants could serve as their own controls or two randomly selected, representative populations in case vs. control groups could be compared. Send me the data and I’ll conduct the statistical analysis of the results! 🙂


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