Loss Aversion Lessons From Chicago Teachers

Sep 20, 2012
A recent experiment suggests Chicago teachers are motivated by loss aversion. Express Scripts uses this same technique to help patients make better decisions.

National Public Radio aired a story on Sept. 19 about the application of behavioral science to public education.

The concept tested was one with which Express Scripts is very familiar: “loss aversion,” the theory that the threat of a potential loss is a more powerful motivator than the promise of a future gain.

The experimenters chose a struggling school district near Chicago. They divided the classrooms that would be conducting standardized achievement tests into three groups.

  • In the first, the teachers were offered no incentives for improvements in the scores of their students.
  • In the second, teachers were offered a bonus at the end of the year, determined by improvements in their students’ scores.
  • In the third, teachers were given a $4,000 bonus at the beginning of the school year. They signed a contract mandating that they would repay all or part of the bonus if their students’ scores did not sufficiently improve.

There was no appreciable improvement in the test scores of students in the first two groups. Scores skyrocketed in the third group of classrooms.

What Loss Aversion Teaches Us About the Pharmacy Benefit

While this experiment involved a small sample and has yet to be replicated, it seems to confirm the effectiveness of loss aversion techniques in achieving desired results – something Express Scripts has long confirmed in healthcare through our messaging to patients.

  • Adherence: Patients at risk of nonadherence respond far better to letters that warn of risks, repeated hospitalizations and health complications than they do to letters promoting likely improved health outcomes if they are adherent.
  • More Affordable Medication: Patients are more likely to choose the most cost-effective medication or delivery channel if messages frame the alternatives as “unnecessary additional costs” or “waste,” rather than promoting the “savings available” through generics or home delivery.
  • Copayment Structure: Patients are much more sensitive to increases in their copayments (which feel like losses) than they are to copayment decreases (which feel like gains).

Express Scripts experiments have confirmed that loss aversion obtains desired results in healthcare. Let’s hope additional experiments show that it works equally well in raising student achievement.

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Lab Staff
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