Behavioral Economics

A recent article published by Sibson Consulting could help your institution re-envision how to communicate its employee benefit plans. "Beyond Rational Thinking: Using Behavioral Economics to Improve Workforce Health and Organizational Outcomes," by Christopher Goldsmith, a vice president in the Cleveland office of Sibson Consulting, details common behavioral biases that can cloud employees' rational judgment and keep them from making decisions that would improve their health outcomes.

Instead, employers can implement various techniques to nudge employees to take action. One such technique is providing a "choice architecture" to help frame, order, and describe options so that individuals can more easily make decisions within a larger context.

Among the initial steps an institution can take to enhance employee engagement and decision-making are:

• Inventory existing program designs to identify current behavioral biases.
• Clarify the desired shifts in employee behavior that would improve outcomes for them and for the institution.
• Identify other potential configurations for program design and alternative ways to reframe the options to encourage better choices.
• Estimate costs for reframing benefit options and developing and implementing an action plan.

The full article is available in the December 2011 issue of Sibson's Perspectives.