Behavioral Economics- What is it?

Professor Richard Thaler, a recent recipient of the Nobel Prize, explains behavioral economics as gaining a deeper understanding of human behavior by examining the flaws and biases that influence human decisions. Thaler believed, and proved through research, that having a better understanding of human behavior will make leading people to the right decision easier.

Behavioral Economics and Wellness Programs

With this information, Willis Towers Watson spent the last two years working with World Economic Forum to learn how employers with an understanding of human behavior can make it easier for employees to stay healthy. They found that the most effective wellness programs took into account how the human mind works and aimed to make healthy decisions seem like the easiest decisions. Based on this research, Willis Towers Watson has posted these tips to help employers incorporate the principles of behavioral economics, or human-centric health as Willis Towers Watson has begun calling it, into their wellness programs:

  1. Design plan options that offer meaningful choices to help employees in selecting the plan that best fits their perceived needs.
  2. Develop incentive programs to drive engagement and encourage employees to try programs without using force or promising far fetched results.
  3. Default retirement savings contributions and investments to encourage prudent financial planning.
  4. Offer software with human interfaces that make the “best” choice obvious and easy.
  5. Provide employees with personalized reports that show what could be gained by better planning and what could be lost by failing to make good choices.

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