Behavioral economics can be valuable in formulating and implementing employee benefits and health plans, according to the Society for Human Resource Management (SHRM).
This is largely because decisions people make about health plans are not completely rational, according to the source, but instead are affected by behavioral biases that may prevent them from making the best decisions. For example, individuals may appreciate that a health plan provides preventive care but fail to actually take advantage of it, despite knowing that preventive measures are commonly better for health and wellness in the long-term.
For example, offering a choice between multiple health plans can be complex. If an old plan is maintained and new alternatives offered, SHRM notes, many employees may stick with the old plan due to a behavioral bias in favor of the status quo.
This can occur even if the newer alternatives are more comprehensive, less costly or otherwise advantageous. To overcome that inertia, the source notes, information may need to be presented differently. Too complex a system may cause employees to give up trying to understand, for example, which often encourages them to stay with a previous plan as a known commodity. Therefore, a degree of simplicity is often appropriate.
