Introduction
Behavioral economics is the study of how people could individually analyze their economic choices and make decisions based on them. Importantly, the study emphasizes the fact that not all individuals act rationally and based on reason, as suggested in classic economics theories of supply and demand. Rather, because each person has cognitive and emotional quirks, they may not always be effective at weighing in all risks and benefits of their decisions (Appold, 2021). In terms of healthcare, behavioral economics can be applied to identify different behavioral triggers and use them to create environments in which individuals can make healthier choices.
Discussion
One example illustrating how behavioral economics can improve healthcare is the “loss aversion” principle, which refers to the tendency to be more sensitive to the possibility of loss than gain. This means that introducing more immediate losses for engaging in unhealthy lifestyle choices will have a more substantial effect on improving health. For example, in an organizational setting, employees who smoke may have to pay higher insurance premiums than their non-smoking co-workers or may be offered up-front rewards for abandoning bad habits, such as a free gym membership (Hostetter & Klein, no date). Notably, the Affordable Care Act allows dedicating up to 30% of the employment premium toward wellness incentives.
Conclusion
Thus, behavioral economics can help make healthier lifestyle choices by pointing out to individuals that they can lose massively if they continue being unhealthy. The prospect of a loss is often much stronger than the prospect of again, and such a psychological trick could encourage some individuals to reconsider their behavior. Besides, behavioral economics allows tailoring the approach to each individual and their cognitive and emotional characteristics.
References
Appold, K. (2021). Using behavioral economics to influence healthcare decisions. Managed Healthcare Executive, 31(2). Web.
Hostetter, M., & Klein, S. (no date). In focus: Using behavioral economics to advance population health and improve the quality of health care services.Web.