Active Choice, Implicit Defaults, and the Incentive to Choose / John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian.

Format:

Book

Author/Creator:

Beshears, John.

Contributor:

National Bureau of Economic Research.

Choi, James J.

Laibson, David.

Madrian, Brigitte C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25473.

NBER working paper series no. w25473

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Home-delivered prescriptions have no delivery charge and lower copayments than prescriptions picked up at a pharmacy. Nevertheless, when home delivery is offered on an opt-in basis, the take-up rate is only 6%. We study a program that makes active choice of either home delivery or pharmacy pick-up a requirement for insurance eligibility. The program introduces an implicit default for those who don't make an active choice: pharmacy pick-up without insurance subsidies. Under this program, 42% of eligible employees actively choose home delivery, 39% actively choose pharmacy pick-up, and 19% make no active choice and are assigned the implicit default. Individuals who financially benefit most from home delivery are more likely to choose it. Those who benefit least from insurance subsidies are more likely to make no active choice and lose those subsidies. The implicit default incentivizes people to make an active choice, thereby playing a key role in choice architecture.

Notes:

Print version record

January 2019.