How behavioral economics can help employers respond to COVID-19
As companies grapple with employees returning to the workplace in a COVID-19 world, they face financial, operational and personnel challenges to keep employees, families, customers and communities safe. Companies will physically change workplaces as they reopen, allow many employees to remain remote and implement new policies to minimize the spread of COVID-19. The goal is to save lives, prevent economic loss and mitigate any reputational harm.
Employers that use the learnings from behavioral economics to guide their programs, policy development and employee communications are most likely to achieve this objective. An effective response to the pandemic will keep in mind the hard-wiring of the human brain and use the seven precepts below.
1. We hate losses much more than we like gains (Loss Aversion)
Psychology studies have shown that people generally hate losses about twice as much as they appreciate gains. Employers can diminish the sense of loss from an existing employee benefit, like loss of a gym, if they pair this with a new benefit, such as a flexible fund that can be used to purchase fancy athletic shoes. While loss makes people feel especially badly, the ability to prevent loss is a powerful motivator. Therefore, companies do better by focusing communications about changes in the workplace that may involve some loss for employees on the bad things that are being prevented, e.g., avoiding a workplace outbreak. Framing the context for a loss can help, too. Employers imposing salary cuts can juxtapose this with the alternative of layoffs, which makes the loss of the (still painful) salary cut appear less onerous.
2. We like short-term wins (Present Bias)
Humans sharply discount benefits that will come to them in the future—that’s why we underinvest in our retirement accounts and why we tend to eat too many chocolate chip cookies today even though they add extra pounds in the future. The lesson here is to emphasize current benefits (like more daytime flexibility for remote workers and pay boosts for essential workers) more than distant benefits (like company success or future bonuses) in communications about new programs and policies to address the pandemic.
3. We respond much more to a story than to statistics (Narrative)
The decades-long effort to decrease tobacco use has shown us that statistics are much weaker motivators than powerful stories. Companies should seek to motivate their employees through stories of successful efforts to decrease coronavirus risk in other geographies or industries, and show how this is applicable locally. Case studies of other organizations reopening will be more motivating than summarizing local epidemiologic conditions. This is also true for activities to increase wellbeing, like exercise and good nutrition. Stories of how colleagues are finding creative ways to practice good habits despite restrictions in this pandemic can drive behavior change. A compelling story beats even stark statistics every time.
4. We underestimate the likelihood that something bad will happen to us (Optimism Bias)
We all know that smoking cigarettes decreases life expectancy and increases the chances of a painful death, but 14% of American adults still smoke. Tobacco is highly addictive, and many smokers irrationally believe that they will not suffer any adverse effects. The optimism bias also makes us more apt to play lotteries; we overestimate our chances of winning. Thus, it’s better not to emphasize the likelihood that individuals will get sick if they do not follow physical distancing, but rather emphasize the risk that they may pose to coworkers or their loved ones. This is consistent with our biologic understanding of the role of masks, which protect others more than the mask-wearer.
5. Social networks are enormously important (Virality of Behavior)
Researchers have shown that both alcohol consumption and obesity closely follow social networks; some have suggested that teenagers’ social norms are formed more by their friends than by their families. Social networks remain strong ways to influence employee behavior, even when employees are working remotely. Recruiting social influencers within the organization to help promote new policies can be more effective than a stand-alone memo from the chief human resource officer.
6. We have limited bandwidth for decision-making (Choice Architecture)
If we had to make a conscious decision every time we moved a muscle, we would never get out of bed. We tend to accept the default, whether it is a 401(k) contribution amount or the configuration of our software. Companies should design their workplaces so that it’s easy for workers to follow physical-distancing guidelines. They should remove chairs rather than expect people to sit in every other chair, and establish “in” and “out” doors and stagger work times rather than expect each employee to consciously stay 6 feet apart. Some companies are putting visible cues in elevators to limit capacity and to remind people where to stand safely.
7. We are motivated by much more than money (Intrinsic Motivation)
People don’t just work or perform solely for the money or benefits; many work because they believe in what they are doing. Nurses’ aides don’t stay after their shift to comfort a dying cancer patient for overtime pay, and public interest lawyers don’t see large paydays. Employers can emphasize the social benefits of their programs to address COVID-19, and highlight the impact that their employees can have on helping address this global crisis.
Employees and companies face severe challenges in their efforts to resume business and at the same time reduce the risk of COVID-19 transmission in the workplace and across the community. The seven behavioral economic precepts described above can increase effectiveness of company programs and communications. More importantly, effective employer programs, policies and communications can even help save lives.
Jeff Levin-Scherz, MD, MBA, is a managing director and co-leader of the North American Health Management practice at Willis Towers Watson. Jeff trained as primary care physician, and has played leadership roles in provider organizations and a health plan. He is an assistant professor at the Harvard TH Chan School of Public Health.
Julie Noblick, MPH, is a senior associate in Willis Towers Watson’s Communication and Change Management practice. Prior to joining Willis Towers Watson, Julie worked domestically and abroad on a range of public health issues for the government and not-for-profit sectors.
Jessica H. Jones, MA, is a lead associate at Willis Towers Watson contributing to Health Management and Health Analytics practices. Jessica’s past work includes supporting Willis Towers Watson’s Health System Consulting practice, as well as governance and operational roles managing medical specialty associations.