Procrastination is an enemy of productivity, as we put off uncomfortable tasks until a later date, such that if often never gets done. A team from Harvard, Yale and BYU have developed a tool that they believe will help to overcome that, at least in terms of financial decision making.
The study revealed that giving employees a choice of either picking up a prescription at the pharmacy or getting it delivered to their home resulted in take up of the home delivery option (ie the most financially beneficial one) from 6% to 42%.
“The cost of not taking action really matters in getting people to do something,” the researchers explain. “If you want people to get something done, make it less costly. Make it easy to sign up, and make it costly to opt out.”
Active choice
The heart of the research revolved around a principle known as ‘active choice’, with the study trying to encourage participants to favor the home delivery method of receiving their prescriptions. This method is favored by employers because it’s more cost effective for both them and the employee. The active choice experiment mandated that participants chose one of the two options, but didn’t provide any financial subsidies for either one.
“Enrollment using active choice strikes a balance between the extremes of opt-in and opt-out enrollment,” the authors say. “With active choice enrollment, potential participants are asked to choose for themselves without the bias of a default outcome capturing passive individuals.”
Prior to the experiment, approximately 6% of employees typically chose the home delivery method, but after being given a time-limited choice to make within a 3-month window, this jumped to 42%.
“If you look at 6 percent enrollment, you could assume that people just aren’t that interested in a program,” the authors continue. “But that was a false conclusion. The difference between 6 percent and 42 percent is that many people are procrastinators. They like the idea of home delivery, but they don’t get around to signing up. Active choice helps people not procrastinate choices that are in their self-interest to make.”
The data suggests that without the financial incentive provided by the loss of insurance subsidy, people tend to default to the pharmacy pick-up option because their expenditure on prescriptions are relatively low. If this was actually deployed in the company in question however, it would save the workforce over $400,000 per year, and the company nearly $300,000.
The findings are hot on the heels of previous work from the team that found this active choice approach was also effective in helping people save for retirement via a pension scheme.
