Modifying behavior with financial incentives
Incentives to stay healthy.
Research has shown that rewarding people for making good choices increases the chance that they will continue to make good choices. For this reason, more and more employers are offering financial incentives to employees who take steps to get healthy.
Dr. Kevin Volpp is the Director of the Center for Health Incentives and Behavioral Economics at University of Pennsylvania. He says that companies realize that a healthier workforce means lower healthcare costs.
"There's clearly been a shift in the past few years towards employers increasingly recognizing that the health habits of their employees are one of the top challenges to affordable benefits coverage. Our healthcare system channels nearly all the money towards treating disease once people get sick. There is a growing sense that we can probably do better than that by selectively focusing on programs that are successful in making people healthier and lowering their risk [for disease]."
Companies most often incentivize healthy outcomes by lowering insurance premiums paid by employees at some time in the future. But immediate rewards are much more effective, Volpp says. "The ideal program really does provide people with much more in the way of ongoing, frequent feedback. And, rewards that happen in the present, not just in the future."
Volpp emphasizes that people should make small changes that will not overwhelm or complicate their lives. "If you can substitute drinking zero calorie beverages instead of regular soda, if you drink a lot of soda, that's going to reduce your caloric intake substantially," he says.
He has a similar philosophy when it comes to saving money. Simply setting up an automatic deposit into a savings account that requires little to no maintenance can be a big step towards financial security. "If zero percent was coming out of your paycheck before and now it's 3 percent [or], now it's 5 percent, people tend to stick with that new default," Volpp says.