This article is based on a presentation from RGA's Technovate 2020 web event series: "Is knowledge power? Why we seek the information we do, and how that changes our behaviour." Click here to watch the recorded webinar.
COVID-19 is the first pandemic of the information age. People today can access high-quality information from a range of sources, meaning it has never been easier for members of the general public to understand the risk any new viral threat could pose to themselves, their loved ones, and their communities.
But many do not seek out or use readily available information. In the U.K., for example, even at the height of the pandemic’s first wave, almost one-quarter of the adult population were not accessing daily news about COVID-19, which was easy to find. By the summer, that number rose to almost one-half.
Why is this? How do people decide what they want or need to know? Why do people seek, ignore, or even actively avoid certain information? How does information feed knowledge that can change behaviour? These questions have all been made more pertinent and urgent by the pandemic. These are also questions the life insurance industry needs to answer in order to help it sell protection more effectively and improve the health of its policyholders.
The three impacts of information
Behavioural scientists have long been interested in the roles knowledge and information play in behaviour change. A fundamental belief held by many is that for people, acquiring more information and knowledge about the self must be a positive. As Socrates said: “To know thyself is the beginning of wisdom.”
One reason knowledge is seen as positive is the belief that it should surely lead people to change behaviours in ways that would help them achieve their goals. Being informed, or so the argument goes, is always better than not being informed.
This belief appears particularly strong when it comes to health and financial well-being. For example, the idea that we will be healthier if we have access to more information about our habits, bodily functions, and biological metrics and predispositions has great intuitive appeal. It is what is driving the life insurance industry’s current interest in wellness programs and wearable technologies.
There is, however, plenty of evidence that people regularly avoid acquiring information about themselves, even when lack thereof appears to have real costs. For example, many investors tend to avoid looking at their financial portfolios when the stock market is down and individuals at risk for health conditions such as HIV often eschew medical tests even when the test is free of charge.
A well-timed article in the January 2020 issue of Nature Human Behaviour provided an interesting framework of information seeking concepts that goes some distance to explain why people seek the information they do. In the article, entitled “How People Decide What They Want To Know,” Tali Sharot, Professor of Cognitive Neuroscience at University College London, and Cass Sunstein, the Robert Walmsley University Professor at Harvard Law School and the founder and director of the school’s Program on Behavioural Economics and Public Policy, set forth the case that most people spend their days deciding what information they want to seek, whether from the web, newspapers, or their friends.
To Sharot and Sunstein, decisions to seek information depend on a person’s estimate of the overall impact of information they choose to acquire on their well-being, an impact that manifests in three ways.
First, information impacts action – it can change what people do. People generally want information that will help them make better decisions, which typically means decisions that provide rewards and avoid harm. They therefore judge every piece of information’s instrumental utility, i.e., how valuable and useful the information item might be in guiding actions to a better outcome. For example, a medical test is likely to have high instrumental utility as it may suggest whether having surgery is their right course of action. This is a classically rational reason for seeking information and so is what people tend to focus on when thinking about how information might change behaviour – their own or that of another.
Second, people sometimes will want information not for any relevance to their actions but rather for its affective (i.e. emotional) impact. People therefore judge the hedonic utility of new information items – how the new items might influence their psychological well-being, or more simply, whether they would feel better or worse. We see the impact of the hedonic utility calculation all the time. People tend to actively avoid useful information that might make them feel sad or bad, so often they will weigh themselves less frequently as they put on weight or check their bank balances less frequently as they get into debt. People generally work out their own hedonic balance of knowledge and ignorance to optimize their moods (and possibly their psychological ability to function effectively).
Cognitive utility is a third and equally important element. Information is known to change people’s cognition, i.e., what and how they think about the world. Everyone wants a better understanding of the world around them, and so often seek information out of curiosity and interest that can enhance their ability to do so. Most people have their own mental models representing their conception of how the world works and prefer to seek information that supports and confirms their models. This is known as confirmation bias, which is expressed in assessing every piece of new information’s cognitive utility – whether the information would require them to change, or even rebuild, their mental models.
This means that for most people, the search for information is not always neutral. The human tendency is to search for, interpret, favour, and recall information in ways that confirm or support prior beliefs or values. For example, if solutions to tackling a particular issue might involve an increased role for government in individual behaviour, those who would object to such an increase would be likely to avoid exposure to information that might support more intrusive solutions.
Indeed, according to Sharot and Sunstein, those who understand the three utility impacts can also start to understand how information as well as access (and access choices) may influence behaviour in counterintuitive ways. For example, the positive potential impact of fast food restaurants disclosing the calorie content of their menu items in order to help diners make healthier food choices was overestimated. This may be because “value” and “taste” are more often the rewards diners seek rather than health or weight control. So rather than change behaviour, the calorie information often made diners feel guilty about their choices. As Sunstein wryly noted, rather than creating a nation of salad eaters, listing menu item calories instead created a nation of unhappy hamburger eaters.
Can the life insurance industry use its knowledge more effectively?
Understanding the ways in which information can impact individuals’ well-being can help us in the life insurance industry understand some of the purchasing behaviours we are seeing in many countries during this worldwide pandemic. Too often we underestimate the hedonic and cognitive impact of information when assuming what kinds of information people will seek out and then act upon. Getting a test for COVID-19, for example, or even just checking for its symptoms might cause some people fear and anxiety. For others, legally enforced public health restrictions might conflict with their political and philosophical ideas about individual freedom and the role of government.
I believe Sharot and Sunstein’s framework of information-seeking model might also help explain some of the communications challenges faced by our industry. We must remember that many people are not likely to seek out information about their health risks or about life insurance because it can make them feel sad and anxious.
For example, the process of thinking about life insurance forces people to face their own mortality and its potential impact on their families. This generally brings forth emotions of loss and grief – emotions with low hedonic utility in that they tend to negatively impact peoples’ emotional well-being. We cannot change this; it is a consequence of the very nature of the product. Still, life insurance sales have increased since the pandemic, most likely because COVID-19 has sparked for some an anxiety response and purchasing life insurance may have reduced that anxiety. But at some point, the pandemic and the discomfort and anxiety it is eliciting may pass, and sales may return to normal. Most likely, we will always need to “sell” life insurance rather than relying on customers’ willingness or urgency to seek it out and buy.
The Sharot-Sunstein framework could also temper some of the projections life insurers make about the potential health impact of wellness and wearable solutions, which are often premised on the role more personalized, precise, and timely information might play in behaviour change. But this premise assumes most people will want to receive such information, even if it is emotionally discomfiting. Sadly, there has been abundant evidence over many years that health risk information is, at best, a weak interventional factor for changing health behaviours, especially when the behaviours that needs to change, such as lack of exercise or unhealthful eating, are routine, habitual, and long-term. The best wellness solutions therefore employ other behavioural intervention techniques such as goal setting, gamification, messenger effects (influence of messenger source on decision-making), and social influence, and recognize that initial engagement with the customer or policyholder is the key challenge.
These challenges should inspire rather than dishearten those of us who work in life insurance. That most people do not seek information about life insurance does not mean life insurance is a bad product, in the same way that people avoiding information about their health does not mean that getting healthy is bad. Instead, it suggests that we insurers need to raise our game when trying to change our current and potential customers’ openness and responses to knowledge and information. We are an information-rich industry, and we have a remarkably comprehensive and nuanced understanding of the drivers of financial, physical, and emotional health and well-being. But too often, we assume better information is all that is needed to cultivate clients and change policyholder behaviour for the better. If we can understand how and when to best communicate salient and important information to our targets, then we will have the power to do great good.
The COVID-19 pandemic has accelerated our understanding of this challenge. What can we do to use this knowledge?