Many of the patient-targeted incentive programs introduced to date have not utilized insights gained from behavioral economics on the psychology of human motivation. This makes their success all the more impressive, but suggests that more carefully crafted incentive interventions could provide 'more bang' for the same buck.
One important lesson from the psychology literature is that very small incentives can have a large impact if delivered with great frequency, ideally soon after behaviors that are being incented take place. In one set of landmark studies, Higgins and coauthors induced long-term abstinence from heroin and cocaine addicts using very small reward vouchers redeemable for consumer goods delivered daily on proof of abstinence,26
even though the manifestly larger rewards incumbent on kicking their addiction had failed. These programs are highly cost effective, even in comparison with the cost of the drug alone – i.e., ignoring costs such as crime and unemployment.27
Moreover, a meta-analysis of such programs found that the immediacy of reward delivery was a key predictor of program efficacy.28
Likewise, a daily lottery-based incentive for warfarin adherence showed significant improvements in both inappropriate medication dosing and time out of INR range.29
Providing small but tangible rewards may be even more effective in clinical contexts such as high blood pressure or hypercholesterolemia in which patients are asymptomatic but need to take medication regularly.
Another important lesson is that the same gain or loss can have very different impacts depending on how it is 'framed'. Most importantly, when it comes to incentives for health promoting behavior, small gains and losses segregated from larger payments are more likely to influence behavior than those integrated into larger payments.30
Thus, getting a discount of $25 off a $1,000 insurance premium is likely to be much less motivating than receiving a separate payment of $25. For this reason, a reward-based program may be more effective than a program based on insurance premium adjustment. People may prefer insurances which charge higher upfront premiums but provide frequent and explicit rewards for good behavior.
We believe that positive incentives generally work better than negative incentives. In some cases, such as quitting smoking or dieting, healthy behaviors remove a major source of pleasure and are likely to cause stress. Introducing the threat of sanctions does nothing to offset the loss of pleasurable activities and is likely to exacerbate the stress, which has been shown to cause relapse to addiction as well as violation of diets.31
Patients are also less likely to voluntarily accept incentive schemes that involve punishment rather than reward and are likely to be resentful if such programs are introduced without their consent. However, ‘stick-based’ approaches are used fairly widely and direct comparisons of positive and negative incentives should be more systematically tested.
Lotteries are likely to be more effective than direct monetary payments if the expected value of rewards is small. People tend to discount very small costs and benefits, a phenomenon known as the 'peanuts effect' which helps to explain the popularity of lotteries.32
People also tend to over-weight small probabilities, which also helps to account for the popularity of lotteries.33
Both of these factors suggest that lottery payments will provide greater motivation than small certain payments of equal expected value; if the direct payment is large this is probably not the case. Deposit contracts, in which individuals voluntarily enter into agreements in which they lose money if they fail to meet certain health goals, can be used to take advantage of loss aversion, a well-documented phenomenon in which people feel the pain of losses much more strongly than the joy of a gain of equal magnitude.33
A final idea that we believe has great potential but, to the best of our knowledge has yet to be tried, would involve providing patient and physician with a joint incentive bonus contingent on achievement of a specific goal, such as smoking cessation or weight loss. The prospect of such a joint payment could create the feeling of patients and physicians being on the same 'team' working together toward a mutually desirable goal. Such approaches could also be used in creating incentives for groups of patients that would be realized if your ‘buddy’ or other members of the team realize their goals.