Review and special article
A structured review of the effect of economic incentives on consumers' preventive behavior

https://doi.org/10.1016/j.amepre.2004.07.002Get rights and content

Abstract

Improving participation in preventive activities will require finding methods to encourage consumers to engage in and remain in such efforts. This review assesses the effects of economic incentives on consumers' preventive health behaviors. A study was classified as complex preventive health if a sustained behavior change was required of the consumer; if it could be accomplished directly (e.g., immunizations), it was considered simple. A systematic literature review identified 111 randomized controlled trials of which 47 (published between 1966 and 2002) met the criteria for review. The economic incentives worked 73% of the time (74% for simple, and 72% for complex). Rates varied by the goal of the incentive. Incentives that increased ability to purchase the preventive service worked better than more diffuse incentives, but the type matters less than the nature of the incentive. Economic incentives are effective in the short run for simple preventive care, and distinct, well-defined behavioral goals. Small incentives can produce finite changes, but it is not clear what size of incentive is needed to yield a major sustained effect.

Introduction

This paper evaluates evidence of the impact of economic incentives on consumers' adoption of preventive health behaviors. On the surface, prevention seems like a valuable goal for healthcare consumers. They should want to preserve their health; obviously, however, behavior is not that simple. Individuals seeking preventive care face monetary, temporal, and psychological costs. Poor segments of the population face special problems. They may have to provide a co-payment to visit the provider and pay a larger amount if the service is not covered under their insurance; or if they do not have health insurance, they may have to pay a substantial amount to receive preventive care. Disease prevention and health promotion vary from simple behaviors that require one finite action (e.g., immunizations) to complex behavioral changes that require a number of steps and must be sustained (e.g., weight control, or quitting smoking). The latter require significantly greater investments of time and effort than getting an immunization. Lifestyle changes such as these are also psychologically more costly since individuals must give up things that are pleasant. Sustained change is harder to achieve than one-time events. One way to encourage consumers to pursue preventive behaviors is to offer specific incentives. This paper reviews efforts by investigators in a variety of settings to offer consumers explicit economic incentives.

The underlying question is not whether incentives work, but how well they work. Studies demonstrate that consumers appear to be price sensitive toward preventive services. For example, having insurance increases the rates of breast exams and cervical screenings1 and influenza shots.2 Co-payments are associated with fewer physical exams3 and less preventive care.4 However, determining how well incentives work requires addressing questions such as: What magnitude of incentive is needed? Does the threshold level vary with the desired behavioral change? At what point are such incentives cost-effective?

A key issue in evaluating the effectiveness of incentives is understanding what behaviors are subject to change. Is change a matter of removing barriers or stimulating positive actions, or do other important forces at work need to be addressed? Two distinct domains of theory apply here. Economic theory recognizes that people do not always make rational decisions.5, 6, 7 Although people know that certain behaviors are bad for them, they are unable to change their behaviors even though they realize that changing their behavior would ultimately make them better off. Individuals who engage in unhealthy behaviors may be better off if mechanisms are put in place to help them change their behavior.5 Recent psychological research on decision-making processes emphasizes the importance of an individual's adaptive responses to environmental problems that may seem “nonrational” to an outside observer.8, 9

Information may be an important barrier. Individuals may not know about the health benefits/risks of certain behaviors/screenings. At least some people respond to information regarding health consequences of behavior such as smoking and diet.10, 11 Some individuals may not be able to assess their risk of various diseases. For example, smokers poorly estimate the risks associated with smoking.12, 13, 14, 15 Many individuals rely on their physicians to tell them what preventive services they need, but physicians may not have the appropriate incentives to inform their patients; they are not usually paid for preventive counseling.

Rational and nonrational decision-making processes and their informational inputs contribute to consumers' preventive care behavior.16 Indeed, preventive services demanded by the consumer are influenced by many factors. Convenience, out-of-pocket outlays, and beliefs about the effectiveness of preventive care and health promotion efforts are clearly important, perhaps particularly for the simple preventive concerns. Complex preventive concerns requiring sustained effort over time may be more strongly impacted by the readiness of the consumer to embrace feelings of self-efficacy and the belief that change is possible, as well as the willingness of the consumer to accept the provider's authority or collaboration in matters of personal lifestyle.

An incentive's overall perceived value may reflect consumers' expectations and assumptions. A consumer may be more affected by economic incentives for simple preventive services than those for complex decisions that require significant cognitive processing of multiple sources of input.

The goals of an incentive are shaped by the problem that it is designed to address. For instance, it can facilitate accomplishing preventive tasks (e.g., transportation, daycare), or reward adherence to a preventive regimen. Economic incentives can enhance purchasing behavior (e.g., by reducing the price of a service) or they can be direct inducements that effectively supplement income.

This paper examines the evidence on the impact of economic incentives targeted at motivating consumers to adopt and/or maintain simple and complex preventive health behaviors. Disease prevention and health promotion cover a wide spectrum of behaviors, from simple, one-time vaccinations to complex behavioral changes such as weight control. This review does not directly assess the impact of health maintenance organizations (HMOs) and other managed care risk-sharing, payment, and pricing mechanisms as compared to fee-for-service. While there is considerable interest in the effects of these larger economic incentives, the focus here is on explicit economic incentives for preventive care. The effects of managed care are too indirect. The potentially numerous confounding factors derived from different patient populations, physician populations, and structures and processes of different systems might overwhelm the potential usefulness of a review of explicit incentives.17

Section snippets

Definition of prevention

Preventive care and health promotion were defined as those situations where consumers may consider themselves healthy or physically at risk but not yet labeled with a diagnosis. This includes individual-based health promotion and preventive services as defined in Healthy People 200018 and Healthy People 2010,19 but excludes mental health, substance abuse, and health protection concerns, such as injury prevention, occupational health and safety, environmental health, and oral health. Tertiary

Results

Table 1, Table 2 identify the 47 articles that passed the inclusion criteria and were selected for review. Twenty-four articles20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43 (listed in Table 1) addressed simple preventive care: Seven addressed immunization; two addressed cancer screening; two prenatal care; three attendance to educational sessions for STD/HIV prevention; one recruitment for a smoking-cessation program; and nine preventive care

Discussion

Economic incentives for prevention appear to work but their mechanisms are not well understood. Descriptions of incentives fail to distinguish their goals as explicit reinforcements of behavior change from simply serving as a means of directing a person's attention to a neglected outcome.

Economic incentives appear to be effective in the short run for simple preventive care and distinct, well-defined behavioral goals. There is less evidence that economic incentives can sustain the long-term

Conclusions

Financial incentives, if they are big enough, can influence discrete behavior at the individual level in the short run. The benefits of such incentives may be magnified if they are coordinated with each other and with system-level incentives, although this potential synergy remains untested. System-level economic incentives can help to change the larger healthcare environment, in turn prompting individual providers and consumers to adapt to a new environment. More importantly, since various

References (71)

  • R.W. Jeffery et al.

    Effectiveness of monetary contracts with two repayment schedules of weight reduction in men and women from self-referred and population samples

    Behav Ther

    (1984)
  • J.P. Sciacca et al.

    Influences on breast-feeding by lower-income women: an incentive-based, partner-supported educational program

    J Am Diet Assoc

    (1995)
  • M.L. Stitzer et al.

    Contingent payment for carbon monoxide reduction: effects of pay amount

    Behav Ther

    (1983)
  • A.B. Coffield et al.

    Priorities among recommended clinical preventive services

    Am J Prev Med

    (2001)
  • D.S. Kenkel

    The demand for preventative medical care

    Appl Econ

    (1994)
  • J. Mullahy

    It'll only hurt a second? Microeconomic determinants of who gets flu shots

    Health Econ

    (1999)
  • D.C. Cherkin et al.

    The effect of office visit copayments on preventive care services in an HMO

    Inquiry

    (1990)
  • L. Lillard et al.

    Preventive medical care: standards, usage, and efficacy

    (1986)
  • J. Gruber et al.

    Is addiction “rational”? Theory and evidence

    Q J Econ

    (2001)
  • D. Kahneman et al.

    Prospect theory: an analysis of decision under risk

    Econometrica

    (1979)
  • P.E. Johnson et al.

    Understanding variation in chronic disease outcomes

    Health Care Manag Sci

    (2002)
  • G. Gigerenzer

    Adaptive thinking: rationality in the real world

    (2000)
  • P.M. Ippolito et al.

    Information, advertising and health choices: a study of the cereal market

    Rand J Econ

    (1990)
  • P.M. Ippolito et al.

    Information and advertising: the case of fat consumption in the United States

    Am Econ Rev

    (1995)
  • W.K. Viscusi

    Do smokers underestimate risks?

    J Polit Econ

    (1990)
  • W.K. Viscusi

    Age variations in risk perceptions and smoking decisions

    Rev Econ Stat

    (1991)
  • W.K. Viscusi

    Smoking: making the risky decision

    (1992)
  • Slovic P. Cigarette smokers: rational actors or rational fools. In: Slovic P, ed. Smoking: risk, perception and public...
  • Rieskamp J, Hoffrage U. When do people use simple heuristics, and how can we tell? In: Gigerenzer G, Todd P, ABC...
  • F.J. Hellinger

    The impact of financial incentives on physician behavior in managed care plans: a review of the evidence

    Med Care Res Rev

    (1996)
  • U.S. Public Health Service. Healthy people 2000: national health promotion and disease prevention objectives....
  • U.S. Public Health Service. Healthy people 2010. Washington DC: U.S. Department of Health and Human Services,...
  • G.S. Birkhead et al.

    The immunization of children enrolled in the Special Supplemental Food Program for Women, Infants, and Children (WIC)The impact of different strategies

    JAMA

    (1995)
  • D.W. Dahl et al.

    Encouraging use of coupons to stimulate condom purchase

    Am J Public Health

    (1999)
  • S. Deren et al.

    The impact of providing incentives for attendance at AIDS prevention sessions

    Public Health Rep

    (1994)
  • Cited by (228)

    View all citing articles on Scopus
    View full text