Practical Implications of Behavioral Economics for Dermatology Practice: Part 2
Wednesday, November 20, 2013
In this article, we continue our discussion of insights into the
implications of behavioral economics for dermatology practice.
Counterintuitive conclusions arise with the observation that humans
violate the assumptions of rational choice theory. These
'irrational' choices have important implications for dermatology
||People favor an option presented as a default choice, rather
than weighing it equally against other options
||The tendency to recall negative events more easily that
|The Easterlin Paradox
||Beyond a certain level, rising income is not associated with
||People's happiness quickly adjusts to changes in
||Money is placed in separate 'mental accounts' with different
marginal propensities to consume
Default options have extremely powerful effects
on human choice behavior. In their book Nudge, Richard
Thaler and Cass Sunstein describe a variety of ways in which
socially desirable outcomes have been encouraged simply by making a
particular choice the default.2 Consider retirement
planning; too few employees sign up to make contributions to their
companies' retirement plans. One way to address this problem is to
offer employees more retirement plan choices and options on how to
invest their retirement contributions; however, this approach
actually reduces the rate of employee participation in retirement
schemes. Companies that automatically enroll their new employees in
the 401(k) retirement plan obtain much higher enrollment rates than
those that require employees to 'opt in' to participate. People
tend to go with the default options; the more complicated the
decision, the more likely they are to just stick with the
Similar effects are seen in organ donation programs. Countries
that use an 'opt-out' system have much higher organ donation rates
than those that use an 'opt-in' system.2 In a similar
way, by using the default option phenomenon to present what they
believe is the best treatment choice as a default, physicians are
likely to influence patients to choose that option. For instance, a
dermatologist can say to a psoriasis patient, 'For patients like
you, the usual choice is Enbrel.' If the physician goes on to
describe a long list of alternative, more complicated options,
patients might be even more likely to accept the default option.
Presenting a long list of options tends to overwhelm the patient;
too many choices increases the probability of choosing the default
option. When Medicare Part D was started in Maine, 46 options were
offered, and many patients were so overwhelmed by the decision that
they did not sign up.2 Maine developed a system to
automatically switch patients into the option that would provide
the best coverage, leading to much better outcomes.
Negativity bias is the tendency to place much
more weight on observed negative events than on statistically more
common positive events. One negative story about a brand or product
can outweigh much larger numbers of positive incidents. For
example, a single negative story about a Tesla Model S battery
catching on fire drove Tesla's stock price down by 10% in 2 days,
whereas the stock price rose by only 2% when Tesla received a
5-star crash test rating based on much more data.3 Even
when most reviews are positive, stakeholders become extremely
concerned about one or two very negative reviews on websites such
as DrScore.com (physician offices), Amazon (books), or Yelp
(restaurants). Although patients generally rate their doctors very
highly, with an average rating of 9.3 out of 10,4 it
takes large numbers of positive ratings to undo the psychological
effect of one very negative rating.
Negativity bias is a problem for patients' perceptions of
medications. If a patient has heard one horror story about a
medication from a friend or relative, the patient may be very
unwilling to try the medication despite statistics showing the
likelihood of benefit from the treatment. If the physician is aware
that the patient has a strong bias against a particular medication,
the physician can compensate by recommending a different
medication. Even if the alternative medication is very similar, the
physician may be able to create a positive impression of that
medication by emphasizing its differences from the disfavored
The Easterlin Paradox is the finding that,
beyond a certain modest income level, additional income is not
associated with increased happiness.5 In addition,
people tend to misjudge the level of spending that will actually
increase their happiness. In Happy Money, Elizabeth Dunn
and Michael Norton argue that people could get more happiness out
of their spending by investing in connections with others rather
than spending money on oneself, and by buying more experiences
rather than things.6 Patients who join support groups
such as the National Psoriasis Foundation (NPF) not only become
more knowledgeable than other patients,7 but also have a
highly beneficial support network of fellow patients. By working
together to raise money and demand political support for
psoriasis-related causes, NPF members develop strong bonds and
enhance their happiness. Doing good deeds together for the entire
psoriasis community raises happiness much more than self-interested
activities done alone.
To exploit the happiness benefits of positive outcomes, perhaps
medical treatment should be presented to patients as an experience.
This is already a common practice in cosmetic dermatology, and
should be emulated in clinical dermatology. Presenting the expected
improvement in psoriasis symptoms by stressing the activities and
experiences that could result from skin clearing, rather than just
changes in the lesions, is likely to give patients a better sense
of the potential benefits of treatment.
On a similar note, the hedonic treadmill
concept suggests that a person's happiness easily adjusts to new
circumstances, whether circumstances improve or decline. People
compare themselves to a reference group of similar peers, and may
not feel any more successful or enduringly happy when they move up,
since they then adopt more successful people as their reference
group. Thus, when patients have an initial improvement in their
disease, they may feel great about it. However, after some time
they may lose satisfaction with that degree of improvement and may
begin to feel their treatment is 'no longer working'.
Mental accounting is another cognitive bias in
which people mentally place money in separate accounts. People are
more likely to travel across town to get a pen for $5 instead of
$15 than to get a suit for $490 instead of $500.8
Objectively, whether it is worth traveling across town to save $10
is not related to the total price of the item, but psychologically,
the benefit of saving $10 seems much greater when it is a greater
fraction of the total price. Amazingly, Thaler found that even when
the buyer was purchasing both items simultaneously and paying the
exact same total amount regardless of which was the discounted
item, there was still a major difference in willingness to
travel.8, 9 Separate mental accounts may explain why
some patients do not mind paying $10 for an over-the-counter
medication, but may balk at paying $10 for a better prescription
treatment because they think it should be fully covered by
insurance. If patients are missing their phototherapy appointments,
it may be helpful to determine whether they have a mentally
separate 'gas money' account that gets depleted when gasoline
prices rise.10 If so, a home light unit is probably
The cognitive biases that underlie 'irrational' choices are
ubiquitous. With a sound knowledge of these biases, we can help
address the issues of human behavior that play a large role in
patients' satisfaction and treatment outcomes.
1. List of cognitive biases. http://en.wikipedia.org/wiki/List_of_cognitive_biases.
Accessed October 17, 2013.
2. Thaler RH, Sunstein CR. Nudge: Improving Decisions
About Health, Wealth, and Happiness, Revised and Expanded Edition.
New York: Penguin; 2009.
3. Ariely D. Ask Ariely: On Tesla, To-Do Lists, and
Knowing the News. http://danariely.com/2013/10/14/ask-ariely-on-tesla-to-do-lists-and-knowing-the-news/.
Accessed October 15, 2013.
4. Feldman SR. If 90 percent of patients are happy, why do
doctors need patient feedback? http://drscore.wordpress.com/2011/02/15/if-90-percent-of-patients-are-happy-why-do-doctors-need-patient-feedback/.
Accessed October 16, 2013.
5. Easterlin RA. Does Economic Growth Improve the Human
Lot? Some Empirical Evidence. In: David PA, Reder MW, editors.
Nations and Households in Economic Growth: Essays in Honor of Moses
Abramovitz. New York: Academic Press; 1974.
6. Dunn E, Norton M. Happy Money: The Science of Smarter
Spending. New York: Simon & Schuster; 2013.
7. Nijsten T, et al. Members of the national psoriasis
foundation: more extensive disease and better informed about
treatment options. Arch Dermatol 2005;141:19-26.
8. Kahneman D, Tversky A. Choices, Values, and Frames. Am
9. Thaler RH. Toward a positive theory of consumer choice.
J Econ Behav Org 1980;1:39-60.
10. Yentzer BA, et al. Explicit and implicit copayments for
phototherapy: examining the cost of commuting. Dermatol Online J