Citation

Cawley J. J. Policy Anal. Manage. 2014; 33(3): 826-832.

Affiliation

Department of Policy Analysis and Management, and the Department of Economics, and the Institute for Health Economics, Health Behaviors and Disparities at Cornell University, 2312 MVR Hall, Ithaca, NY 14853, USA. JHC38@cornell.edu

Comment On:

J Policy Anal Manage. 2014 Summer;33(3):820-6

Comment In:

J Policy Anal Manage. 2014 Summer;33(3):832-4

Copyright

(Copyright © 2014, Association for Public Policy Analysis and Management, Publisher John Wiley and Sons)

DOI

unavailable

PMID

24988656

Abstract

Morgan Downey raises several interesting issues in his essay. We agree on several points, for example, that current regulations are "really quite porous," with the result that enrollees will be able to get the rewards even if they do not alter their health behaviors. There are also several areas of disagreement that merit further discussion, and I focus on those in this essay. To provide context, my position is that financial incentives for healthy behavior can improve social welfare by internalizing the external costs of risky behaviors and help people with time-inconsistent preferences to adhere to a healthier lifestyle. To achieve the goal of increasing social welfare, the penalties for risky health behaviors should be set equal to the external costs. The design of the rewards (in terms of their frequency, salience, and the amount of loss aversion they invoke) may be critical in determining their effectiveness.

Language: en