This blog adds Nudge to the Hypothesize/Experiment/Learn thinking of March 16, 2009. A concept derived from behavioral economics, nudge denotes a gentle “push” or incentive to coax decision makers to choose a preferred option from a series of alternatives. The nudged choice is often seen as “best” from an important social perspective – perhaps economic policy, health care, government program, business strategy, etc. And randomized field experiments are many times optimal venues for nudged learning.

More Smokers Quit if Paid, Study Shows, WSJ, Feb 12, 2009, details results of a study published in the New England Journal of Medicine that calibrates the success of getting smokers to quit by offering financial incentives. Over 20% of adults in the U.S. smoke, costing their employers $3,400 per smoker annually. 480,000 Americans die each year from smoking-related diseases, so smoking remains a significant health and business problem.

The study tracked a group of 878 smoking General Electric employees for 18 months from 2005 and 2006. The employees were first given information on smoking cessation programs and then randomly divided into two groups. Employees in the intervention group were offered cash incentive payments of up to $750 over the course of the investigation to abstain from smoking, while those in the control group were provided no such cash subsidy. The maximum $750 payment for included $100 for completing the program, $250 for not smoking six months after enrolling in the study, and an additional $400 for another six months of abstinence. Smoking habits were self-reported, with validation from saliva and urine testing.

The results of the experiment were somewhat heartening, with 14.7% of the intervention group in contrast to 5% of the controls reporting smoking cessation for the first year of the study – a significant difference. At the conclusion of the 18 months, the figures were 9.4% and 3.6% respectively. The study raises important policy questions, but the fact that individuals were assigned to intervention and control groups at random supports the internal validity of the results: other unmeasured or potentially conflicting explanations for the differences in cessation between groups should be minimized. Steven Schroeder, director of the Smoking Cessation Leadership Center at UCSF, remarked that the study “shows that incentives work”. At the same time, the study offers little in terms of the external validity or generalizability of findings. Are the positive results specific to the population tested? To study time frame payouts? What will the results look like in five years?

Lead researcher Kevin Volpp, a physician and faculty member of the prestigious Wharton School of the University of Pennsylvania, is also Director of the Leonard Davis Institute of Health Economics Center for Health Incentives (LDI CHI). The charter of LDI CHI is to facilitate research that makes significant contributions to reducing the disease burden from major public health problems such as tobacco cessation, obesity, and medication non-adherence for cardiovascular and other diseases through better understanding of how to design and apply incentives and other behavioral economic approaches to improving health. The center has three primary missions:

  1. To advance knowledge about incentive design
  2. To develop and test scalable and cost-effective applications
  3. To work with private and public sector entities such as large employers, insurers and health systems to improve health care delivery and the health of the population

The LDI CHC is research engage -- combining evidence-based health care with the behavioral economics of incentives -- and our now-familiar business tool chest of hypothesize/test/learn to nudge the population in a healthy direction. A powerful learning and change platform indeed.

Steve Miller's blog can also be found at miller.openbi.com.