Incorporating Incentives and Behavioral Economics in the Workplace
“Overeating, sedentary behavior and smoking cost employers billions of dollars in health care expenses and lost productivity each year. These behaviors not only contribute to preventable chronic diseases, but also increase the likeness of an early death; as well as create an enormous economic and emotional toll on employees and their families. Behavioral economics offers employers tools to reverse this trend and increase employees’ engagement in their health and well-being. This relatively new subfield of economics integrates economic science with the findings of psychological research to explain decision making and positively influence behavior.” (Wood, 2011) Behavioral economics
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Communication is a huge element going back to the topic of enabling change—for example, there must be communication about the change and clarity about any decisions that employees need or are wanted to be made. The purpose of behavioral economics is to create an environment that will make the healthy choice the default choice; or better yet, the choice of least resistance. Take for instance in this example, “One hospital required health care workers to receive a seasonal flu shot as the default, unless they signed an extra form to opt out of the vaccine. The default opt-out option for flu vaccination boosted vaccination rates among the hospital’s health workers from the national average of 40% to 98%. (Schnirring, 2011) This example helps to give a better understanding as to why default options are of importance. Another example of the application of behavioral economics in the workplace and making the healthy choice the “easier” choice is, eliminating the “typical” vending machine food options consisting of candy bars, donuts, pop, etc. and replace them with healthy food options such as fresh fruit, water stations, etc. The placement of these healthy choices is also very significant—for example, placing healthy food choices at eye level has proven to be selected more often than if they were out of view; this follows the “out of sight, out of mind” concept. …show more content…
It is more like a school of thought or a style of modeling, which should lose special semantic status when it is widely taught and used. The hope for the future is that behavioral economics models will gradually replace simplified models based on stricter rationality, as the behavioral models prove to be tractable and useful in explaining anomalies and making surprising predictions.” (Camerer, 2002) As mentioned throughout this paper—the use of incentives, as well as behavioral economics is extremely significant. Behavioral economics not only helps to make improvements in the workplace, but more importantly improvements for the individual outside the workplace as well. Ultimately it is our job as wellness professionals to educate and promote the healthy way of life to all individuals regardless of age, gender, sex, etc. Although we may not be able to directly change the health of our nation, we can make a powerful impact. This impact will ultimately result in positive outcomes which is what wellness professionals, like myself are passionate
Ordinarily, individuals are tempted to make unhealthy choices in the environment they live in, with even candy readily available at gas stations, customers are responsible for what they buy. To be able to overcome obesity, one has to have motivation to be healthy in the
Obesity has caused our nation an abundant loss in productivity in businesses due to mental or physical issues causing an obstacle to efficiency while active in the work place. The total loss production time is at 11.7 billion dollars per year. According to Shell Oil Company, 11.2 million dollars were lost because of absenteeism related to obesity. Annual productivity loss is between 3.38 and 6.38 billion dollars. When obese, there is a major increase in disability payments and disability insurance premium costs. This produces higher fiscal costs to the federal government. Obesity alone charges our country and businesses billions and billions of dollars each year just from being absent from work or being present, yet not productive
The Affordable Care Act was passed in 2010 to make sure that most people had medical insurance. With this new healthcare system came the responsibility that individuals would have to take initiatives to try to stay or get healthy. The preventative care portion included in the Affordable Car Act is a big item and very important in health care reform and very positive for the American people. Wellness in the workplace has become a very important issue to help reduce companies medical cost, and to help employees get on track to know their numbers, get healthy, and have a positive healthy mental attitude. Many employees do not understand or know how to get healthy and live a healthy lifestyle. With the rising cost of healthcare relating to
Another possible strategy that has gained traction in recent years is high-deductible health plans or HDHPs. The reasoning behind the creation of this type of plan is to expose people to more of the cost of their lifestyle choices. This in turn, would incentivize them to care more about their well-being and strive to live a healthier life. By implementing high deductibles, along with increasing the amount of information that is given to consumers about obesity and its effects, the idea was to turn people into “activated health care consumers”. While this type of plan would keep premiums low,
In today’s modern society, technology plays a central role in the lives of most people. In the past, people enjoyed healthy, active lifestyles; however, the increasing dependence and reinforcement we receive from using technology has negatively impacted on the amount of time we spend active. (Epstein, Roemmich, Robinson, Pauluch, Winiewicz, Fuerch, & Robinson, 2008; Epstein, Roemmich, Saad, & Handley, 2004). According to behavioural economic theory, in order to successfully increase time spent exercising; time spent on the undesirable behaviour should be substituted with the more desirable behaviour. (Epstein, Saelens, & O’Brien, 1995)
Foremost, the healthier a society is, the more productive employees are, which boosts revenue. When an employee’s health is in question, an employer may actually lose 77 percent of productivity, making the loss greater than that of health care expenses. These numbers go up with the combination of lack of exercise, 96 percent loss, and unhealthy eating habits, 93 percent loss, said a study from Brigham Young University, according to an article in a 2012 Education Letter. The study included “those who did not believe their workplace environment would support them in becoming physically and emotionally healthier were more likely to
The Affordable Care Act was passed in 2010, with the intent of ensuring that most people in the United States have medical insurance. With this new healthcare system came the responsibility that individuals would have to take initiatives in an effort to stay healthy or at the least, increase their level of activity and health awareness, making them more responsible for their own wellness. The preventative care portion included in the Affordable Care Act is one of the fundamental items of the law and is a particularly meaningful, very positive attribute in health care reform for the American people. Wellness in the workplace has become an essential issue to help reduce companies’ medical cost, and to help employees get on track to know their numbers, get healthy, and have a positive healthy mental attitude. Many employees do not understand or know how to achieve and maintain a healthy lifestyle. With the rising cost of healthcare, especially relating to people not taking care of their bodies, wellness in the workplace has become even more critical. Author Lori Breiner (2007) “believes wellness in the workplace has economic benefits for organizations, because if workers are healthy, they miss less time from work.” Breiner’s theory would suggest that better health increases productivity and profits in the workplace.
Although, short-term or outcome based financial incentives may be profitable to some, they may not be an effective approach always. For example, some individuals in desire to receive a large amount of incentive to reach the specific health outcome such as weight loss, he/she might choose to starve to reach the target, followed by potential adverse effects later. On the other hand, many individuals fail to maintain healthy behaviors after attaining the health outcomes and on receiving the incentives. Furthermore, Incentives tied exclusively to health outcomes may discriminate those who are in utmost need of health improvement such as the elderly and socioeconomically backward individuals, as outcome-based incentives may unintentionally overcompensate
When a business hires an employee they are looking for a person to do a job to the best of their ability and poor health could hinder those efforts. When a person is inattentive and lackadaisical during a work day they are wasting that companies time. Employers should be encouraged to set into place requirements for exercise and healthy eating of all their employees to ensure the utmost productivity of that company. Companies with cafeterias could make sure that only or mostly heathy food is served for breakfasts or lunches. They could also have exercise classes available for employees at lunch time, if they have the space. Or they could try to arrange a discount deal for employees at a nearby gym. This way they would be encouraging employees to be healthy and also helping to keep the business
With new technological advancements and the changing of times, people have become increasingly sedentary in their daily lives (“Pounding Away”). With all of our cars and motorized vehicles, few people are forced into strenuous physical activities that would burn the calories needed for a healthy lifestyle. With the creation of robots and mechanized devices to make working more efficient and cheapen labor costs, less than 20% of jobs in the private sector now require moderate physical activity (“Obesity in America”). What had once required for you to get up and walk to the other side of the room can now be done by writing an email or picking up a phone. This decrease in activity in the workplace would be fine if it were counterbalanced by steady leisure exercise. Sadly, many people in their leisure time do not exercise. What do they do instead? The average American spends “55% of his waking hours sitting down” (“Obesity in America”), whether it’s in front of a TV or a computer. Another outcome of the modern age is the change in eating habits. Serving sizes have steadily increased and many fast food places now offer an option to super-size their meals, e.g. McDonald’s, for just a few cents
The impact that the incentives in health care, readmission in care delivery, and the role of Electronic Health Records are still being investigated. While some Americans feel that the ACA has not helped them, it has in fact, has an increase in savings by offering incentive programs.
Obesity has become a serious problem with more than one third of adults being obese in the United States. Obesity is seen as a self-destructive behavior accompanied with smoking and use of other drugs thus, government officials and other business bureaucrats expressed the need to impose higher health insurance premiums on the obese. Obesity is not always due to the personal behavior of people and can be linked with the environment and genetics; I personally feel that obese people should not pay a higher health insurance premium compared to those that aren’t. Government officials and other business bureaucrats
Statistical information confirms: obesity and overweight have already turned into an issue of national concern. In 2002, “a National Survey conducted by American Sports Data revealed that 61% of adults in the U.S. felt that they were overweight, 19% admitting that they were ‘considerably’ overweight” (American Sports Data). The major causes of obesity, overweight, and similar nutritional problems included genetics, population trends, hurried lifestyles, high-carbohydrate diets, less demanding workplaces, smoking cessation, and social class aspects (American Sports Data). That hurried lifestyles and a less demanding workplace contribute in the development of obesity trends is clear. But even more importantly, because the number of those who are overweight or obese exceeds one half of the American population, the government must control our diets. The information about the costs of obesity and related diseases is even more compelling.
Wellness in the workplace needs to be taken seriously by all employers, and employees. There has been evidence that making sure employees eat healthier leads to lower call out rates and more savings on health plans. In an article in Employee Benefits magazine it states that “Wellness management does not need to be complicated, or costly. A few simple steps could help to mitigate long-term problems, such as introducing early intervention activities that red flag cases identified via an absence reporting mechanism, the proactive management of musculo-skeletal conditions and stress, introducing a smoking cessation program or running regular health wellbeing days. “Workplace wellness as a concept has been used extensively in recent years by management in business and industry, health professionals, fitness experts, and others. This is a policy that should be implanted in all jobs. Wellness may not
Health and wellness in the workplace is crucial to business success. Increasingly, it is recognized that the workplace itself has a powerful affect on people’s health. When people are satisfied with their job, they are more productive and tend to be healthier. When employees feel that the environment at work is negative, they feel stressed. Stress has a large impact on employee mental and physical health, and in turn, on productivity. Companies that promote healthy lifestyle habits for employees to improve their health, often take the success of the company to heart and are likely to be absent less often for health related reasons.