Behavioral Economics

Behavioral economics is a field of study that blends psychology and consumer economics in order to understand why people make sub-optimal decisions about important performance, financial and health care matters. Most decisions that people make involve “mental short cuts” and some degree of emotion. Often, behavioral biases come into play and the result can be sub-optimal decisions.

Is your organization struggling with increasing healthcare costs or low employee participation in wellness initiatives? Behavioral economics is critical to solving these challenges. Here are just a few recent examples:

                                               
SituationImpact of Behavioral Economics
A client struggled to gain employee participation in a health risk questionnaire even with a $175 value incentive Achieved 91% employee participation (up from 17%) and 85% spouse participation (up from 0%)
A higher education institution struggling with attendance and absence, resulting in unreliable support staff, entitlement mentality and significant employment relations issues Reduced unscheduled absences by 52%, reduced high performer turnover by 29%, increased low performer turnover by 36%, reduced extended absence by 72% and reduced related employee relations issues by 95%
A client with 13.5% of their participants using antidepressant drugs (at a cost of 6.5 times more than those not using such drugs) but with only 21% also seeing a behavioral health clinician Increased the use of clinicians by 130% by reframing the plan and reducing both financial and perception barriers
An employer struggling with increases in health care costs sought a solution that didn’t rely on increasing co-pays Reduced prescription drug costs by 8%, reduced employee costs by 30% and improved prescription adherence rates

Sibson helps clients identify the sub-optimal decisions being made by their workforce and quantifies their impact to the organization. Sibson’s experts have extensive experience with reframing plan designs and with employee communications to create a more effective choice architecture that guides employees toward better decisions. This helps solve nagging “pain points” for organizations and improves:

  • Population health
  • Health care consumerism
  • Attendance within time off and absence programs
  • Employee satisfaction with cash compensation
  • Performance management processes and productivity
  • Workforce retirement readiness
  • Participation in initiatives such as wellness, retirement programs and voluntary benefits
  • Investment results

Behavioral economics can be very helpful to an organization’s bottom line and for employees’ lives. By using principles from behavioral economics, organizations can encourage employees to make better decisions that will improve outcomes for themselves and the organization. Behavioral finance, a close cousin to behavioral economics, helps improve investment results with retirement plans. No matter where your focus is with employee benefits and your workforce, Sibson can help design or realign your strategy, your plan designs and your communications to better meet your goals.