Traditionally, companies have often offered financial incentives or educational programs to encourage their employees to lose weight, stop smoking, and be healthier in general.
The problem with both financial incentives and educational programs is that they assume that employees are acting rationally. That once they learn why healthy eating is important they will change their ways, or once they find out that they'll earn X amount of dollars for filling out a form they'll jump to do it.
The reality is that many of the decisions your employees make are irrational, albeit predictable. That's where behavioral economics comes in. It takes that predictability and builds on it to help people make healthier decisions.
For instance, if you're trying to improve medication adherence, offer an automatic prescription refill program by presenting your employees with the following options: 1) the inconvenience of refilling prescriptions manually each time, or 2) having the refills sent automatically.
This is called an enhanced active choice. It highlights the negatives of the first option while still letting your employees make the final decision.
University of Pennsylvania professors David A. Asch and Kevin G. Volpp tried this with CVS Caremark members, and the number of people choosing automatic refills more than doubled.
They also tried another strategy for incentivizing employees to fill out health-risk assessments. Instead of paying each employee $25 for filling out the form, they would randomly pick a group of employees each week, and any employees in that group that had filled out the form would win $100. Plus, if more than 80 percent of the group had completed it, each member of the group would get a $25 bonus. The completion rate rose from 40 percent to 64 percent.
Another strategy is, instead of offering employees the chance to earn a cash reward if they fill out a form or adhere to prescriptions, actually give them the reward in advance and threaten to take it back if they don't achieve the task.
"The aim of behavioral economics is not just faddish games that work one time to achieve a minor health goal," Asch and Volpp write in a Harvard Business Review article. "Its techniques have been used to significantly increase weight loss, smoking cessation, and diabetes management."
According to Asch and Volpp, health education alone is not enough.
"Health education is critically important, but if we devote resources to educating people about what they already know but don't do, we may overlook more practical solutions," the professors write.
Similarly, financial incentives often aren't enough to have a meaningful impact on employees' lives.
For instance, Volpp and other colleagues found that employees often fail to complete a health-risk assessment, even when they're offered compensation for it. Increasing the payment obviously helps, but that's an unsustainable method for a business.
"Money has its limits as a carrot, yet an enormous industry in wellness is devoted to this highly transactional approach of delivering points, badges, miles, or dollars to encourage good behavior," Asch and Volpp write.