As though it heard the Christmas wishes of policy nerds everywhere, the World Bank Group made behavioral economics the theme of its 2015 World Development report.
The field, popularized by books like Nudge, aims to show how small policy tweaks can inspire people to make big changes. It's what gave us strategies like having people opt out of donating their organs, rather than in, or labeling garbage cans as "landfill" rather than "trash." All we need to be better, the Nudgists would say, is better choice architecture.
The whole report is, shall we say, a bit more lively than your average global-development tome. It features illustrations such as this one, which shows how people make decisions based on the actions of others:
The "Health" chapter features one particularly interesting finding. Policymakers are often trying to get more people to take up preventative health measures in order to save money and lives down the road. Usually these services are cheap and plentiful, so it's frustrating when people choose not to, say, get a flu shot or an annual OB-GYN exam.
But in looking at six different preventative health interventions across three countries, the authors homed in on one important factor that influences whether people will take steps to protect their health: price. Specifically, whether the service is free, or nearly free, seems to make all the difference.
Percent of People Using a Health Product, by Price Point
"People are willing to adopt many health goods at a price of zero (or almost zero) but almost completely unwilling to adopt it at prices just slightly above zero," they write. In India, a free bar of soap is snapped up; one costing a few cents languishes on shop shelves. The same tendency held true for studies involving deworming medicine, mosquito nets, and water disinfectants.
It's not just that a $0 price tag made these services more affordable. The report authors argue that free, to consumers, implies that doing that health behavior—whether it's putting up a mosquito net or getting a flu shot—is the social norm. Buying something is a choice, but getting something is like winning the lottery:
When prices fall toward zero, free may convey a social norm: We all should be doing this. Free allows people to experiment with a product when they are uncertain of its value, and free can have an affective influence (an individual is excited to have won the opportunity to get something free).
People were also less likely to over-think health decisions that were free—and thus less likely to change their minds about following through. And at no cost, they were more likely to provide them for family members. When anti-malarial mosquito nets were made free, for example, more parents attached them to their children's beds.
Though these studies were performed in the developing world, it's a fairly universal rule that if governments or businesses want people to take care of themselves, they have to make it as easy as possible.
It helps explain, for example, why flu shots, birth control pills, and annual OB-GYN exams are free for Americans who have insurance. Insurers want people to get those things so that they don't get sick (or pregnant) later, so insurance companies will remove any and all barriers that stand in the way. Including, it turns out, spending even a dime of cash.
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