Avoiding exercise, skipping preventative care, forgoing helpful new digital tools and solutions — why do we as humans often make decisions that we know are bad for our health, even when making the right choice is easy?
The field of behavioral economics studies the reasons that people often make irrational decisions, and it offers insights into how organizations can not only account for, but actually harness, human beings’ irrational behavior to nudge people toward preferred outcomes.
To give AgeTech Collaborative™ (ATC) startup participants some practical ways to incorporate behavioral economics into their programs, in June the ATC hosted a virtual event, “Behavioral Economic Nudges to Drive Engagement,” led by Karen Sussman Horgan, CEO and co-founder of VAL Health. “Human beings are irrational,” says Horgan. “Companies should design for that irrationality and use these insights from behavioral science to nudge behavior change and engagement.”
Horgan presented four insights that can help guide companies’ efforts as they design their programs, user journeys, communications, reward incentives and more. The first insight is to make the right path the easy path — by changing default options in software, for example, to be the preferred option.
Second is to use social proof to compel action and nudge people toward the preferred behavior. However, social proof can also backfire and have a boomerang effect, unintentionally nudging people toward the non-preferred behavior.
Third, the design of financial incentive programs matters more than their size: Incentives that follow a loss frame instead of a gain frame — that is, where people could lose a benefit they already have versus earning a benefit over time — yield better results. Finally, Horgan advises to keep things simple by limiting options: “Humans only have so much mental capacity to process decisions. With too much choice, people will shut down.”
Founded in 2011, Val Health is a leading health-related behavioral economics consulting firm, combining its founders’ authoritative academic research with real-world experience to help companies drive engagement and sustain behavior change. It joined the ATC in 2023 as a Business Service, helping drive the Collaborative’s mission of advancing the AgeTech space by making their insights and services available to other Collaborative participants.
For any company that’s considering trying to implement behavioral economics techniques in their program, Horgan suggests starting small. “Companies shouldn’t let themselves get overwhelmed when trying to figure out how to apply all the insights from behavioral economics,” she says. “That itself is choice overload. Instead, keep it simple and think about how you can change just one thing” — and the results will come. Looking at the big picture, Horgan notes just how effectual those results can be. “At Val Health, it’s been fantastic to take the human biases that we study in randomized control trials and apply those insights in the real world, and see how it impacts tens of millions of lives at a time,” says Horgan.
You can learn more about Val Health at their website.
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