Tailored Financial Incentives to Fight Medical Non-Persistence in Therapeutic Treatment: A Behavioral Economic Engineering Approach

39 Pages Posted: 10 Jan 2016

See all articles by Behnud Mir Djawadi

Behnud Mir Djawadi

Paderborn University

Rene Fahr

University of Paderborn; IZA Institute of Labor Economics

Florian Turk


Date Written: January 9, 2016


The development and design of financial incentive schemes as a sustainable and cost-effective intervention strategy to foster effectiveness of medical interventions remains a significant challenge in health care delivery.

Based on the findings of the conceptual model of medical non-persistence we test three different financial incentive schemes. These incentives are derived upon concepts of behavioral economics, in particular mental accounting, prospect theory and choice bracketing, and incorporated into deposit, copayment and bonus schemes. We conduct randomized laboratory experiments to evaluate the performance and effectiveness of each incentive scheme on persistence behavior under controlled conditions. Participants in the experiment are students remunerated according to their performance in the experiment.

We find that financial incentive schemes based on the principles of prospect theory significantly improve treatment persistence compared to the situation where there are no incentives at all. This finding implies that the simple but smart re-allocation of co-payments and co-payment support between the treatment initiation phase and treatment maintenance phase represents an effective way of promoting persistence behavior.

This study delivers first applications of behavioral interventions based on theoretical foundation. Using the method of experimental economics the study serves as a first proof of concept of a scalable way to design, calibrate and test the effectiveness of financial incentives on behavioral change. This approach is inevitable for broad application in real world as it minimizes the need for patient research while clarifying the impact of interventions under controlled conditions before these interventions get implemented in the field.

Keywords: Financial incentives, Medication persistence, Medication compliance, Behavioral economics, Laboratory experiment, Behavioral Economic Engineering

JEL Classification: C91, I11

Suggested Citation

Mir Djawadi, Behnud and Fahr, Rene and Turk, Florian, Tailored Financial Incentives to Fight Medical Non-Persistence in Therapeutic Treatment: A Behavioral Economic Engineering Approach (January 9, 2016). Available at SSRN: https://ssrn.com/abstract=2713058 or http://dx.doi.org/10.2139/ssrn.2713058

Behnud Mir Djawadi (Contact Author)

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098

Rene Fahr

University of Paderborn ( email )

Warburger Str. 100
D-33098 Paderborn
+49 5251 60 3692 (Phone)

HOME PAGE: http://www.quantitative-cg.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
+49 228 38 94 0 (Phone)
+49 228 38 94 510 (Fax)

Florian Turk

GlaxoSmithKline ( email )

5 Moore Drive
RTP, NC 27709
United States

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