The Complexity of Human Behavior and Incentives

This chapter explores the complexity of human behavior compared to hard sciences and challenges the application of economic models to every situation. It discusses the effectiveness of different incentive models, emphasizing the importance of context and complexity when designing incentive programs.

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In this episode, we spoke with Matt Loper, CEO and Co-Founder of Wellth, an app that helps people with chronic conditions improve their health through better adherence to their prescriptions. Matt’s company works with healthcare providers and insurers to provide rewards for patients who need small behavioral interventions to stay on track.

Wellth does this by “giving” patients money at the start of each month to take their pills. To prove they’re on track, they use the Wellth app to take a photograph of their medicines in the palm of their hand. But every day that they miss, they are penalized in the form of fee, which nets them less money at the end of the month. This loss-contract model is gaining notoriety and it should be: Wellth discovered that positive incentives accounted for adherence rates around 60% while loss-contract models account for better than 90% adherence rates.

Matt is quick to point out that the science of behavior change is not like chemistry, where all the inputs and outputs can be measured and is easily replicable. Behavioral science, Matt argues, is much more complex and requires more rigorous testing.

In our grooving session, Kurt and Tim discuss loss contracts in greater depth and the complexities of the human condition.

Links

Matt Loper: matt@wellthapp.com

Kevin Volpp, PhD. Director, Center for Health Incentives and Behavioral Economics, Leonard Davis Institute: https://hcmg.wharton.upenn.edu/profile/volpp70/

Kevin Volpp’s group: https://chibe.upenn.edu/

Eisenberger & Camerer: https://www.deepdyve.com/lp/sage/eisenberger-r-cameron-j-1996-detrimental-effects-of-reward-reality-or-GQliEjHSH0

Teresa Amabile: http://www.hbs.edu/faculty/publication%20files/12-096.pdf

Riding the Bike: http://blog.lanterngroup.com/?s=bike

Ran Kivetz: https://www8.gsb.columbia.edu/cbs-directory/detail/rk566

Kurt Nelson: @motivationguru and https://www.linkedin.com/in/kurtwnelson/

Tim Houlihan: @THoulihan and https://www.linkedin.com/in/tim-houlihan-b-e/

Check out the Behavioral Grooves website: https://behavioralgrooves.com/

Musical Links

Fleetwood Mac – Rumors: https://en.wikipedia.org/wiki/Rumours_(album)

Stevie Nicks would be the IT girl today. https://en.wikipedia.org/wiki/Stevie_Nicks

Simon & Garfunkel https://en.wikipedia.org/wiki/Simon_%26_Garfunkel