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How behavioural economics is being used to support employee wellbeing

Published: 29/03/2022

A structured behaviour change programme can be used to incentivise positive lifestyle choices in way that prevents serious illness and preserves the mental health and wellbeing of employees. Here’s how.

Did you know that nearly half (43%) of UK diseases are considered preventable? Of these, 88% are linked to our health and wellbeing1.

Meanwhile, a significant number of health risks go unnoticed. Around 50% of heart attacks and strokes are associated with high blood pressure, while high cholesterol is associated with one in four heart and circulatory disease deaths in the UK2  - both of which tend to be silent killers.

To make matters worse, most of us have an air of complacency when it comes to our health, which doesn’t help when it comes to making better lifestyle choices. This is where behavioural economics can come in, especially in the workplace.

In the past, organisations traditionally focused more on making money than looking after their staff, but research has proved that a healthier and more productive workforce is better for business3. In light of the pandemic, the majority of them are taking notice.

Last year, 96% of small business owners identified mental health as a top priority, while 36% stated that the health and wellbeing of their employees is likely to have the biggest impact on their decision-making over the next year, the 2021 Healthy Hybrid Report revealed.

With employee mental health and physical health intrinsically linked, here are three ways that a structured incentives-based behaviour change programme can be used to incentivise positive lifestyle choices to not only preserve wellbeing but prevent serious illness too.

1. Optimism bias

People are generally overconfident when it comes to their own health and wellbeing. As an example, Vitality member data suggests that 49% of people with four or more risk factors rated their health as ‘good’ during their online health review – suggesting a significant disconnect. However, those who actively decided to assess their Vitality Age – an objective calculation of lifespan and healthspan based on their current lifestyle – went on to reduce it by 1.4 years on average4  by engaging with healthy behaviours. What this shows is that when people are made aware of this gap, they are more motivated to close it.

2. Hyperbolic discounting

Hyperbolic discounting is our tendency to choose instant gratification over even better rewards later down the line. Even though the future benefits of a healthy lifestyle cannot be disputed, human beings are typically more interested in what they can get here and now. Vitality uses Active Rewards as short-term incentives that add extra value and help make healthy living rewarding in the short-term. It works too. Vitality members who redeemed at least one coffee or cinema ticket as a reward for engaging in healthy behaviours, such as physical activity, during the first year of their plan reduced their Vitality Age Gap by 19% more than those who did not4.

3. Loss aversion

According to behavioural economics, people tend to dislike losing something twice as much as they like gaining something. Evidence conducted in conjunction with RAND Europe helped prove it. It found that Vitality members who took up a benefit that allowed them to pay nothing for a watch if they stayed active were 34% more active than the average member5. Suggesting that, as humans, we are more likely to change our behaviour where losing something is at stake.

Find out more about how Vitality can support the health and wellbeing of employees.

Using behavioural science to improve health and wellbeing

Our Director of Actuarial & Data Science at Vitality, Emile Stipp, discussed this topic at the Cover Wellbeing Summit 2022.
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Find out more about how indexation works and why it is a good idea for your clients, especially at this time.

Where to next?

  • Vitality Programme

    We encourage your clients to lead a healthier life and reward them for doing so.

  • Healthy Hybrid Report

    An evaluation on the health impacts of lockdown and recommendations for businesses to reset their approach to health and wellbeing to create a new ‘healthy hybrid’ flexible working environment.

  • Insights Hub

    Our Insights Hub brings you our range of adviser content - from video series to articles & blogs.

1. “Maximising quality of life: A primer on healthspan and lifespan” Vitality Research Institute, 2021
2. British Heart Foundation UK CVD Factsheet, July 2021
3. Britain’s Healthiest Workplace, Vitality, 2019
4. Vitality analysis, 2014-2019, based on members who completed their Vitality Age in the first month of their plan, compared to the 13th month
5. Apple Watch Study 2018,