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Benefits Column

The Bias of Optimism

A reliance on standard practices may not be limited to healthcare and may indeed extend to human resources and employee benefits. So is it time for HR to take a look at its standard practices, question them and study the issues with a rigor that relies more on experimental design than case studies and surveys?

Monday, August 27, 2012
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I am an optimist. Some people find this annoying.

My parents nurtured my sun-will-come-up-tomorrow attitude through fairy tales, Disney movies and their never-ending mantra that I could do anything I wanted to do and be anything I wanted to be. It wasn't a bad way to be raised.

My unwavering belief that all situations will eventually work out for the best sometimes runs at cross purposes with my academic training to critically evaluate research and strategic initiatives along with their objective outcomes.

This combination of backgrounds seems to make me a walking oxymoron -- a skeptical optimist, if you will.

For years I've been fascinated that -- despite evidence to the contrary -- we often continue to hope a particular approach for addressing a problem will give us the results we desire.

I am not alone.

H. Gilbert Welch -- a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice -- made a plea in a recent New York Times op-ed piece, entitled Testing What We Think We Know, for medical research that "promotes a healthy skepticism toward standard medical practice" and "researchers who know what standard practice is, have the imagination to question it and the skills to study it."

The standard practices Welch cites contribute to an annual U.S. per capita healthcare expenditure of more than $8,000 and potentially exposes all citizens, including employees, to ineffective and unnecessary testing and treatment.

My concern is our reliance on standard practices may not be limited to healthcare and may indeed extend to human resources and employee benefits.

In fairness, the expanding regulatory environment forced HR executives to become laser focused on compliance-related issues. But, is it time to take a look at standard HR and benefits practices, question them and study the issues with a rigor that relies more on experimental design than case studies and surveys?

Also, if we're able to take this challenge on, will we be willing to accept the results and change our behaviors, if necessary?

This last question gives me the greatest pause. And some recent research provides reason for my apprehension.

Tali Sharot is a London-based cognitive neuroscientist who believes almost 80 percent of us have an "optimism bias" -- a belief that the future will be much better than the past or present.

I first became aware of Sharot's research when she gave a talk at the February TED2012 conference.

Sharot's studies give insight into how we maintain unrealistically positive expectations when information challenging those predictions is readily available. It seems most of us update our beliefs selectively and incorporate information that enforces optimism, but dismiss information that contradicts it.

 

In a research paper published in Nature Neuroscience in October 2011, Sharot and her colleagues give examples of this phenomenon.

Study participants were asked to estimate the likelihood that an adverse life event -- such as cancer -- would happen to them. They were then given information regarding the average probability of that event for people similar to themselves. Seventy-nine percent of participants were more likely to update their beliefs when the average probability of experiencing a negative life event was lower than the participants' own estimate than in a situation in which the average probability was higher.

For example, if someone in the study believed he had a 40 percent chance of developing cancer -- and was then told the average probability was 30 percent -- when asked the question a second time, the participant would revise his cancer risk to 31 percent. But, if he believed his cancer risk was 10 percent, he would only revise his cancer risk to 14 percent when asked a second time.

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What does this research have to do with employee benefits?

If we learn that a benefits-plan-design strategy -- such as including employee incentives to participate in wellness programs with the goal of mitigating healthcare-cost increases -- does not work for other companies in the same industry, we may overlook the information.

Sharot's studies indicate while we believe a negative outcome may be true for other people and companies, we remain optimistic about ourselves and our prospective results. And this optimism leads us to make risky decisions.

As a result, guidance -- such as the recent joint consensus statement regarding the use of outcome-based incentives for "reasonably designed, employer-sponsored wellness programs" released in the July 2012 issue of the Journal of Occupational and Environmental Medicine -- can go ignored if it does not line up with our beliefs.

So, how can HR leaders remove their rose-colored glasses when it comes to reviewing standard practices? There are a couple of approaches you can consider using when reviewing employee benefits design.

You can follow your gut instinct. If you fall into the 20 percent of the population with a realistic mindset, you evaluate strategy clearly and incorporate negative results in your decision-making.

 
Or, you can use an objective third party -- like a management consultant or employer-based membership organization -- to help you honestly compare your company and its policies with the experience of other employers in similar industries.

Either tactic should help you meet Welch's call to recognize the status quo, question it and test its usefulness.

HR executives may find that a healthy dose of skeptical optimism may bring renewed creativity to employee benefits design -- accompanied by practical, reproducible results.

Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily.

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