Duration: 10/01/2018 to 09/30/2023

Administrative Advisor(s):

NIFA Reps:

Non-Technical Summary

Statement of Issues and Justification

Need

As research surrounding the rise in obesity, the prevalence of cancer and other rises in mortality continues, the debate over who should pay for the accompanying cost of healthcare is more heated than ever. Not unlike the tax code, the details of healthcare reform find themselves buried in thousands of pages of legal documents no matter which side of the political aisle is proposing a change. As a result, patients and consumers of healthcare in general find themselves at the mercy of lawmakers when it comes to making financially prudent decisions regarding their health. In addition, they must rely on their own previous knowledge and understanding of healthcare related terms, or have the fortitude to devote the energy (intrinsic cost) to learning enough about the products and services available to utilize their insurance resources optimally. Regardless of which government or employer sponsored health insurance program consumers are using to subsidize the cost of healthcare, it is paramount that they learn the basic functions and processes required to maximize the benefit they receive from their insurance provider. It is toward this maximization of benefits (or utility) that we wish to focus our attention in this upcoming Experiment Station cycle.

As consumers increase health management decisions, so too do the financial decisions increase related to health care. Consumers have been facing a multitude of financial pressures and one of these pressures clearly relates to the 2008 global financial crisis. Financial information is complicated and the majority of consumers feel that they lack the adequate knowledge and skills for obtaining and processing the information. In addition, consumers do not realize the influence that psychological factors have on their financial decisions. All of these factors complicate consumer financial decision-making across the lifespan. The consumer-driven approach of decision-making assumes that the simple provision of information will be sufficient to affect consumer choice, the process of using data to inform choice is actually quite complex (Hibbard & Peters, 2003). 

Studies have been conducted on what information consumers would like related to health insurance plans (Edgman-Levitan & Cleary; Paez et al., 2014) and health literacy (Kutner, Greenberg, Jin, & Paulson, 2006). However, there has been little research conducted regarding consumers decision-making related to health finance. Getzen (2000) studied health care expenditures on the individual (micro) and national (macro) levels. He concluded that the amount spent on health care is determined by the amount available to spend rather than the amount of disease, but it has not always been incorporated in discussion of health policy. 

Figure 1. Multilevel model of determinants of health expenditures. Without insurance (left) both income and health status affect expenditures at the micro level. At the macro level, income effects are still strong, but variation due to differences in health status is no longer visible. The short arrows indicate that income also affects health status directly at both the micro and macro levels. With insurance (right), the pooling of funds removes the income constraints at the micro level, and tends to strengthen the correlation of individual health status with expenditures. At the macro level, income effects still dominate (Getzen, 2000). 

As more attention is paid to healthcare, one important aspect of discussion has been the link between health care choices from preventive care behavior, coverage for various procedures and treatments, and the financial implications on both consumers and the public. The impact of financial capability and health care decisions is bi-directional. In other words, as one makes choices on health care, they may endure financial hardships; this creates a financial toxicity in the system where the stress of the finances can hinder recovery (deSouza & Conti, 2017). 

This project will assess barriers and motivators that influence the decision-making process on the micro level (consumers) through a health and healthcare lense. Unlike its predecessor, this project will examine the consumption patterns and decision-making practices of families when the observed services are not necessarily consumed as a matter of choice. Project investigators will continue to examine the effect of economic, psychological, and sociological factors on healthcare spending at the household or family unit level of analysis. The focus of this new project remains centered on information management and financial decision making, as was the previous project. However, due to an increase in the national discussion surrounding the cost of healthcare for both consumers and the public, this proposal recognizes a need for families to be better informed of their options regarding the cost and accessibility of a critical economic good when that good is necessary to sustain life and has a significant and immediate impact on the family. 

Importance of the Work and Consequences if not Done

Health care has become increasingly expensive for the Americans, with a growing share of health costs shifted to consumers. According to a report by the Kaiser Family Foundation, consumers paid an average of $6,435 premiums for single coverage and $18,142 for family coverage in 2016, which were up by 58% since 2006 and 20% since 2011 (Kaiser Family Foundation, 2016a). In addition, 83 percent of consumers had to pay deductibles, which cost $1,478 on average for single coverage and was up 49% since 2011 (Kaiser Family Foundation, 2016b). The deductibles are generally higher for consumers covered by plans sponsored by small employers (an average of $2,069) than those sponsored by large businesses (an average of $1,238) (Kaiser Family Foundation, 2016b). The rising insurance premiums and the increasing use of deductibles and other cost-sharing requirements post financial threats to low-income households, especially those uncovered by public health plans such as Medicare and Medicaid. For instance, compared to those covered by Medicaid, low-income household covered by private insurance plans spend ten times as much on healthcare, and devote a greater portion of their budgets to health care expenses (Majerol, Tolbert & Damico, 2016).

Consumers often need to make healthcare decisions in consideration of their financial resources. For instance, to control health insurance premiums, a growing number of families are switching to high-deductible plans compatible with Health Savings Accounts (HSAs) (Kaiser Family Foundation, 2016a). At the same time, those with high-deductible health plans tend to limit their non-preventive outpatient office visits, prescription drug fills, and various preventive services (Fronstin & Roebuck, 2016). In particular, low-income households who have high-deductible plans are more likely than their high-income counterparts to reduce their outpatient office visits and influenza vaccinations. However, such decisions may result in unexpected losses in financial and health capital. The same report shows that lower-income households who switched to high-deductible plans turn out to have more emergency room visits and in-hospital admissions than those who have regular health insurance plans (Fronstin & Roebuck, 2016). Meanwhile, those with high-deductible plans do not seem to be able to take advantage of the tax-exempt investment opportunities in their HSAs. According to an EBRI report, they tend to use the HSAs as checking accounts designated for health expenses rather than investment accounts. In 2016, only four percent HSA-eligible consumers had investments other than cash (Fronstin, 2017).

The uncertainty of health care policies also elevated the health-related financial threats to households, especially those with family members employed by small businesses. Insurance coverage is closely associated with health outcomes. Those who are uninsured are more likely to experience declines in health and function, preventable health problems, severe disease at the time of diagnosis, and premature mortality (Hoffman, 2008), which in turn have financial consequences. Kim, Yoon, and Zurlo (2012) show that negative health events increase unsecured household debt, and about 20% of the increased debt could be attributable to out-of-pocket expenses. 

There is a pressing need to understand how American households make health decisions in relation to financial decisions and how the health of household members affects household finances and vice versa. There is a tradeoff between the human capital of health and financial capital when a household manages its resources. In a household economics framework, health is produced with inputs of market goods and services, and it also determines the amount of time available for market and nonmarket production (Anderson & Grossman, 2009). Our innovation is to apply the behavioral economics theories to the context of health and finance. This study will examine how psychological factors like self-control, mental accounting, and framing influence health decisions and health behaviors, which are interlinked with financial behaviors and financial outcomes. This research is well suited for a broader land-grant community educational and research priority. Building upon what we have learned about financial decision-making and information management across the lifespan, this new research fills an important gap in understanding family resource management of health and finance. 

The renewal of this project is also important for its potential contribution to the field of family and consumer economics. The research is informed by the latest advancements in behavioral economic theories and is expected to improve the overall well-being of American households. Our previous research over the past two decades as well as the existing literature clearly shows that psychological factors play a powerful role in influencing consumer financial decisions. For instance, consumers tend to make decisions using heuristics, thereby using the least amount of mental energy (Kahneman, 2011). Consumers’ decision-making process is influenced by psychological principles such as self-control, mental accounting, and framing (Shefrin and Thaler, 1988). The findings of this research project are expected to inform stakeholders of the motivators and barriers to sound family resource management for health and finance. Behavioral interventions could be formulated to improve the efficiency of households’ health and finance management and help consumers improve their health outcomes as well as their financial well-being. 

Technical Feasibility

One of the benefits of conducting research as a multi-state team is the ability to leverage the resources, skills, talents and expertise of team member towards the accomplishment of a goal that is greater as a whole than the theoretical sum of its parts. For this phase of the project we will be utilizing the vast amounts of combined expertise that our team possesses in the areas of both quantitative and qualitative analysis to conduct an online randomized control trial in an attempt to measure the true effect of behavioral economic interventions on the household’s ability to maximize utility under pressure (combined health and financial loss).

As we have done in other iterations of this project, we will conduct a thorough review of the literature surrounding the object of our observation: irrational, health-related household financial decision-making. Irrational household economic behavior is the primary assumption of behavioral economics and the reason for which effective intervention may be necessary. Leveraging the qualitative and quantitative skills of our multi-state team we will simultaneously collect focus group data and analyze multiple secondary datasets to identify a core set of irrational financial behaviors exhibited by health-constrained households in the United States. Due to our group cohesion, organization and degree of experience working as a team, aggressively attempting these three simultaneous, short-term goals is not unreasonable nor is it unprecedented.

Following this discovery process, we will explore some of the findings within a focus group study. This will allow us to more deeply probe some of the issues we have identified from the literature and the exploratory work with quantitative and qualitative data.

Our final phase will then utilize experimental design to determine the sensitivity of some of the choices being made between economic capital and physical/health capital with respect to heuristics and other behavioral biases influencing economic choices such as anchoring, recall bias, and representativeness bias. Using an experimental design based on scenarios helps to enhance internal and statistical conclusion validity by increasing control over the manipulated variables and reducing random, unmanageable variables (Jin & DeVaney, 2011). Written scenarios will be developed to simulate the financial/health related decisions. Subjects will be randomly assigned to one of the scenarios. The scenarios will be varied to manipulate factors which are frequently involved in decision making. The researchers will include constructs from information management (such as source of information, use vs. avoidance) and constructs from the behavioral life-cycle hypothesis. For example, in a pilot study by a team member, the participants were assigned to one of two instruments (Mountain, Gutter, Ruiz-Menjivar, & Copur, in press). After ascertaining basic information including financial knowledge, preferences, and experiences with homeownership, participants were presented with two scenarios and asked to select the mortgage (Adjustable Rate Mortgage or Fixed Rate Mortgage) they would choose in that situation. However, in one instrument the participant also received a one-page explanation of the difference between an Adjustable Rate Mortgage and Fixed Rate Mortgage, including when one should choose one over the other. The team will utilize an Internet sampling firm to provide sufficient responses for the study. The firm would facilitate random assignment to the different scenarios. 

Advantages for doing the work as a multistate effort

This team has over a decade of successful collaboration bringing different skills and expertise to the table. This allows for pursuit of mixed methods as well as working to establish robust samples for qualitative studies. In addition, we have identified various strengths of team members which serves to expedite our efforts and avoid time loss as a result of improper task assignment. For this project we will also be able to leverage collaborators from our respective campuses, mainly from areas of public health or healthcare administration. Several of our team’s members are participating in a Culture of Health Pilot project funded by the Robert Wood Johnson Foundation; this could create unqiue opporunities as the two projects proceed. 

Outcomes

Findings and implications will be reported to consumer educators including the extensive Cooperative Extension network. We would prepare and distribute fact sheets through eXtension.org. We also plan to present this research at appropriate conferences including: Association for Financial Counseling and Planning Education, American Council on Consumer Interests, Family Economics Resource Management Association, Extension Health Outreach Conference as well as others. We also will submit manuscripts to relevant journals including: The Journal of Consumer Affairs, Journal of Financial Counseling and Planning, Family and Consumer Sciences Research Journal, Journal of Family and Economic Issues, International Journal of Consumer Sciences, Journal of Economic Psychology, and other relevant journals in the field of consumer economic behavior. 

In addition we see the possibilities of publishing our extensive literature review, and the results of our quantitative and qualitative discovery processes in peer-reviewed journals. The findings from our online randomized control trial may also be useful in the medical field in the form of training manuals and webinars for healthcare providers, researchers, administrators and of course, patients, their families and those who care the most about their recovery.

Potential Impact

This project is expected to result in a greater understanding of how families make financial decisions especially how they consume and ultimately manage large amounts of complex information in stressful situations (specifically the loss of health). The results should provide a foundation for developing, implementing, and evaluating educational initiatives to increase health literacy, health insurance literacy and improve financial decision making in the face of physical, financial, emotional and psychological change. We anticipate that the results of this study will encourage educators, medical practitioners and insurance providers to include the sociological factors of family, peers, and the influence of social media in educational settings, personal interactions and outreach programs. This project will result in a better understanding of how consumers use or avoid information and which sources of information are used and/or avoided by different sub-groups of consumers based on demographic and psychological factors. It will inform patients and practitioners about the endogenous relationship between financial stress and health outcomes. Also, the results can be used to recommend public policy initiatives and suggest new or enhanced approaches for reaching consumers beyond traditional audiences. 

Our outcomes will help to bring patients, health care practitioners and insurance providers together in a way that fosters goodwill between these three equally valuable stakeholders in the health of our nation. We hope that insurance providers will make it easier for patients to understand the impacts of their decisions to see a doctor or pursue a course of action that may require expensive surgery. That doctors and nurse practitioners will better understand their role in disseminating complex information and find more effective ways to help patients avoid crucial, financial mistakes. We expect our outcomes to open the pathway to better patient-doctor conversations about money. That family members will know how, when and what types of questions to ask, and to whom, in an attempt to help avoid costly financial errors and improve patient outcomes through understanding, comprehending and acting on that information. We expect to have an impact on the overall understanding of how reactions (negative, positive or neutral) to the financial consequences of medical procedures affects, on average, the outcomes of those same procedures. 

Finally, as demonstrated in previous projects, we expect to explore, utilize and share our discoveries of innovative and cost-effective ways to collect data. This group has a strong reputation among those in the field of consumer and family economics as a leader in innovative research methods and experimental design. Past projects have implemented the use of online learning platforms, crowdsourcing internet marketplaces, online survey distributors and social media outlets. As more ways to collect data become available we will be there on the front lines finding new ways to gather useful information about families and the various methods they use to make critical, financial decisions.

Related, Current and Previous Work

A search of CRIS indicated that no other research project had specifically examined the issues of personal finance and decision making. There were two projects related to the proposed study and both are the precursors of this proposed project: NC 1172 and the previous NC 2172.  Results from 1172 were used to inform NC 2172. This study builds on the work of both but will focus the following discussion on NC 2172 which is the more recent body of work.   

The Complex Nature of Savings: The main concepts that were examined in the NC 1172 project, were presented in a series of research papers based on data collected from a sample of almost 1,000 low and moderate income households. The overall goal of incorporating economic, psychological and sociological elements into a savings model were the subject of the paper "Exploring the Relationship of Economic, Sociological, and Psychological Factors to the Savings Behavior of Low- to Moderate-Income Households" (Gutter, Hayhoe, DeVaney, Kim, Bowen, Cheang, Cho, Evans, Gorham, Lown, Mauldin, Solheim, Lokken, & Dorman, 2012). Multinomial logistic regression was utilized to explore the relationship between economic, sociological and psychological variables, and the likelihood of having only a savings account or both savings and investing accounts compared to having no savings or investment accounts. The results indicated that economic factors had a stronger relationship to savings behaviors than sociological or psychological factors. 

Hayhoe and Gutter (2012) examined the reliability of several psychological scales which were measured during the collection of the data set titled the Complex Nature of Savings: Psychological and Economic Factors (Note: This is the same data set as described in the preceding paragraph). The sample considered in this data set is low-to-moderate-income consumers with a respondent (or spouse/partner of the respondents) between the ages of 24 and 66. The data were collected under the sponsorship of the North Central NC1172 multistate research program. Researchers from 12 universities contributed to the development of the instrument for the study. The scales included in the study were as follows: the Rook & Fisher (1995) Impulsivity Scale; the three sub-scales (distrust, anxiety bargain-conscious) from the revised Yamauchi & Templer (1982) Money Attitudes scale by Roberts & Sepulveda (1999); the Richins & Dawson (1992) Materialism Scale; the Sherer et al. (1982) Self-efficacy Scale; and Grable & Joo (2004) Financial Risk-tolerance Scale. In addition, these data were used to develop a Financial Management Behavior Score. The results showed that for people with low-to-moderate incomes and where the respondent or their spouse/partner was between the ages of 24 and 66, the modified scales worked as well as the original scales. Thus, researchers using this data set will be able to employ the scales with confidence.

Purchase of Life Insurance: H. Kim, DeVaney, and J. Kim (2012), examined the purchase (e.g. ownership) of term and cash value life insurance by low-to-moderate-income households. The sample for analysis was reduced to 454 households because 354 households in the NC1172 data set did not answer the survey questions about life insurance. About 37% of the respondents (N = 454) purchased term life insurance and 31% purchased cash value life insurance. Interestingly, 37% had purchased term life insurance on the spouse/partner and 28% held cash value life insurance on the spouse/partner. Factors related to the purchase of term life insurance included household income, higher (self-reported) financial knowledge, and saving regularly. Age and saving regularly were the only two factors significantly related to purchase of cash value life insurance. Although it might be commonly assumed that low to moderate income households cannot afford life insurance, these results show that the purchase of life insurance was feasible for a considerable percentage of low to moderate income households. 

Our subsequent five year project expanded our scope to explore behavioral economics and financial decision-making and information management across the lifespan. We identified three major choices that impact one’s long term financial security: student loan borrowing, decision to purchase a home, and retirement.

Cho, Xu, and Kiss (2015) reviewed 69 previous studies and reports on student loans and provided the summary on the body of knowledge. First current trends and theories (i.e., Human Capital Theory) related to investment in college education were reviewed. Next the effects of student loans on college attainment from various with mixed results were reviewed.  Lastly, studies examining the effects of student loans on later life circumstances, such as loan default, health outcomes, life transitions, and wealth accumulation, were reviewed. This articles concludes with a call for future research on the decision-making process of a family about investment in college education, including qualitative research.

Xu, Johnson, Bartholomae, O’Neill, & Gutter, (2015) reviewed external and internal factors influencing homeownership decisions for millennials, that is, those who were born between the 1980s and the early 2000s. The findings from a thorough review suggest that the Great Recession has impeded mortgage accessibility for the millennials. High student loan debt also slowed down their transition to homeownership. Family events, such as marriage, divorce, and childbearing, all affect millennials’ homeownership decisions. In particular, millennials are featured by higher likelihood of delayed marriage, postponed parenthood, and cohabitation with parents. It is anticipated that this information will enable financial advisors, educators, and policymakers to understand the challenges of homeownership for millennials and to formulate strategies to help this age cohort with their personal financial planning.

Xu, O'Neill, Gutter, Wounded-Head, and Kiss (2017), reviewed an extensive body of literature about retirement decisions. They reviewed theoretical foundations for deciding the time to retire; empirical evidence about the importance of financial literacy, information, and social effects in retirement planning; rules to determine adequate retirement saving amounts; interventions to help people save for retirement; and patterns of post-retirement withdrawal patterns. This literature review enables human resources and financial practitioners to better understand challenges faced by decision-makers. It will also provide implications for personal financial planning and inform the design of effective financial education programs and counseling services about retirement planning.

NC 2172 used a mixed methods approach. Several studies made use of an online experiment (Cho, Mountain, Porto, Kiss, Gutter, and Griesdorn (2016). This allowed us to explore how certain treatments would influence core decisions. Our results have confirmed the validity of the approach and the importance of considering behavioral factors. Cho, et al (2016) explained the incorporation of experimental design in an online survey. Derived from behavioral economics framework, the development of experimental conditions in the context of student loan decision making were introduced. The scenarios were developed about a hypothetical high school student considering a college and taking out a student loan. The experimental conditions included gender, manipulation of the benefit of college framed as gains versus loss , and college as an aspiration. The paper analyzed demographic characteristics of different conditions, ensuring that there were no systematic biases in how the sample was assigned to different experimental conditions. Mountain, Gutter, Ruiz-Menjivar, & Copur (2017) used experimental design to explore the role of information on mortgage choice, specifically how a disclosure created by a federal agency would influence choice between an adjustable rate mortgage and fixed mortgage for a given scenario. Participants were randomly assigned to receive this treatment. Even when controlling for financial knowledge and previous experiences, the treatment still influenced the outcome.

Johnson, Evans, Worthy, & O’Neil (2016) presents results from an online focus group. This study used data from online focus groups collected from November 2014 to April 2015 to understand college students’ decision-making processes when borrowing money to finance their education. Data were collected using an online course management system. Results suggest that: (a) students relied heavily on advice from parents, guidance counselors, and friends; (b) attending college was not possible without student loans; and (c) students knew very little about the loans they would be responsible for repaying. Recommendations for financial educators and counselors to help student borrowers make prudent decisions about education debt are presented.

Electronic learning technology and web-based survey sampling were used to conduct two virtual focus groups designed to investigate how student loan borrowers make decisions regarding their financial aid. Participants were recruited nationally by Survey Sampling International and separately at six land-grant universities. Most respondents claimed to have used their financial aid for school-related purposes, while a minority admitted to alternate uses of excess student loan amounts. Best practices for using this innovative focus group approach and lessons learned from working with multiple universities are described. Implications for replication of this project and recommendations for Cooperative Extension professionals are also discussed.

In another study, O’Neill, Xu, Johnson, and Kiss (forthcoming) introduced Twitter chat as a research tool. In their designed study, Twitter chat was used to gather qualitative data about young adult financial decisions and to recruit respondents for a more extensive month-long online survey about their financial decisions of student loan, housing, and retirement. The authors first describe Twitter chats as a research tool vis-à-vis two other online research methods: (a) links to electronic surveys and (b) use of commercially available survey panel vendors. They also report representative responses from the Twitter chat. The Twitter chat responses suggest that student loans were the top concern of young adults, and debt and housing rounded out the top three concerns. The internet websites and social media were the most frequently cited source of financial information. A discussion of lessons learned from the Twitter chat experience and suggestions for professional practice was provided.

Researchers are beginning to form groups to utilize a new dataset collected via Amazon Turk regarding housing decisions by consumers. The data were collected with qualitative and quantitative analysis in mind. After the removal of incomplete surveys, the final sample contains 927 respondents. The survey questions focused first on housing situations, the cost of housing, the attitudes about affordability among the respondents and neighborhood factors. Following the housing questions, we included survey items to measure the respondent’s financial knowledge. The questions were derived from the Financial Capability Study and the Global Financial Literacy Excellence Center. Finally, we collected basic demographic and personal finance information from each respondent. Early analysis points to lower than expected attitudes regarding the affordability of housing in the United States.

Several core takeaways exist from the previous work. Limited resource families, face unique financial constraints when making intertemporal resource choices, in the case of NC 1172, this was seen when looking at savings behavior. Further, NC 2172 has shown that some cognitive biases, choice framing, and information management can influence suggested outcomes; this includes decisions about borrowing for student loans as well as mortgage choice. We will build on this work to explore health care choices and finances.

1. Cho, S. H., Mountain, T. P., Porto, N., Kiss, D. E., Gutter, M., & Griesdorn, T. (2016). Experimental design to understand the student loan decision: A methodological note. Family and Consumer Sciences Research Journal, 45(1), 65-76. 
2. Cho, S. H., Xu, Y., and Kiss, D. E. (2015). Understanding student loan decisions: A literature review. Family and Consumer Sciences Research Journal, 43(3), 229-243. doi: 10.1111/fcsr.12099. Best paper in FCSRJ in Personal Finance/Consumer Economics.
3. Johnson, C., Evans, D., Worthy, S., & O’Neill, B. (2016). Using virtual focus groups in Extension research. Journal of the National Extension Association of Family and Consumer Sciences. Available: http://www.neafcs.org/assets/documents/journal/2016%20jneafcs.pdf
4. Johnson, C., O’Neill, B., Worthy, S. L., Lown, J. & Bowen, C. (2016). What are student loan borrowers thinking? Insights from focus groups on college selection and student loan decision-making, Journal of Financial Counseling and Planning, 27(2).
5. Mountain, T.P. Gutter, M.S., Ruiz-Menjivar, J. & Copur, Z. (2017). Exploring the Role of Financial Disclosure Forms in Mortgage Type Selection. Journal of Financial Counseling and Planning, 28(2), 285-299. https://doi.org/10.1891/1052-3073.28.2.285
6. O'Neill, B., Xu, Y., Johnson, C., and Kiss, D.E., (2017). Twitter Chat as A Research Tool: A Study on Financial Decisions of Young Adults. Journal of Human Sciences and Extension, forthcoming.
7. Xu, Y., Johnson, C., Bartholomae, S., O’Neill, B., & Gutter, M. S. (2015). Homeownership among Millennials: The Deferred American Dream? Family and Consumer Sciences Research Journal, 44(2), 201-212. Best paper in FCSRJ in Housing.
8. Xu, Y., O'Neill, B., Gutter, M., Wounded Head, L., and Kiss, D.E., (2017). How Do People Make Retirement Decisions? working paper.

Objectives

1. Understanding family resource management under uncertainties over life span

   
2. Identifying personal characteristics and contextual factors contributing to household financial and health decisions

   
3. Understanding how financial capability affects household health decisions and outcomes

   
4. Understanding how health conditions affect household financial decisions
   

Methods

This study proposes use of mixed methods to achieving its various objectives. These include: 1.) Determine motivators that affect economic decision-making in specified decision situations relating to health care; 2.) Determine barriers that affect economic decision-making in specified decision situations relating to health care; 3.) Determine how motivators and barriers to economic decision-making around health can be manipulated across the life-span of households; and 4.) Determine factors that can reduce negative health consequences for consumers or preventable loss of wealth. Our study uses the Behavioral Life Cycle Hypothesis framework to examine factors influencing the consumer decision-making process. Our initial hypotheses focus on key factors such as the role of mental accounting, economic socialization, framing, self-control, the role of information on decisions related to healthcare management.

The experimental design for each study will utilize a mixed methods approach. We will utilize both online surveys and smaller local convenience samples aimed to explore the decision making by individuals dealing with different health issues. These include online survey and experiments relating to need for health coverage (e.g. relevant age ranges).

It is also our desire to understand how decisions relating to treatments matter at different levels of ramifications from occupational/physical therapy to chemotherapy. These will be analyzed as part of an online survey, then ideally with patients in a focus group/experimental setting.

The sample will include households at the household formation stage, wealth building stage, and entering retirement stages of life. These stages are largely consistent with typical age ranges and family composition. Our sample for the survey should be a total of 1500; with this sample size, the results are expected to lie within two standard deviations of the mean response. The Research Committee will contract with an independent data collection agency (such as Survey Sampling International) to sample, collect, and clean the data for the project. An outside data collection agency is preferred to ensure that the instrument is administered uniformly and to increase efficiency in administration and data collection. This agency can randomly assign participants to different versions of the survey. These web surveys will be identical except for the treatment. This treatment could include the introduction of information to the participant, or a difference in choice architecture.

 

Specifically, researchers will look for motivators and barriers in the household decision making process. In addition, measures of health insurance literacy, financial literacy, time preference, will be factors included in understanding health care management decisions. The study of this panel dataset will help inform future survey and experimental design research in the area of consumer decision making. These experiments of consumer decision making will also be conducted in person with small groups on participating campuses and communities. The goal of these experiments will be to observe the relationships of framing, mental accounting, and other behavioral factors on decision making. The smaller local samples will need to involve 100 participants and will be conducted by select project teams on their campuses or in their communities. These would ideally include those whose families have faced treatment choices before and those who have not. In both instances, the participants will be randomly assigned to a treatment group. The treatment in these experiments will be tied to the role of information as a treatment. This will allow for the sharing of the data collection burden while using a coordinated approach for consistency. The protocols will be the same across states and information will be aggregated and used to further refine the instrument and survey methodology. Participants will be randomly assigned to treatment groups. The online surveys will also include relevant measures suggested by the behavioral life cycle model and results from the NC 2172 studies on behavioral economics, information management, and behavior over the lifespan. This includes factors such as life cycle stage, self-control, cognitive biases, and economic socialization. The psychological scales have been previously tested in psychological research and work of the NC 1172 Team. Consistent with Dillman (1978, 1991) our survey would be sent initially, with additional follow up emails sent to encourage participation in the study.

 

Other guidelines that will be followed include putting questions in a logical sequence, using the proper format for answering, having an easily read layout with clear and concise statements, and not going beyond what is reasonable to expect for people to respond. If a monetary incentive is used, the incentive would be sent with a thank you and notification of receipt of the completed survey. Several members of the research team would conduct initial data cleaning/coding. The data will be downloadable in raw form from the Qualtrics Account. In this form, it can be imported into SAS or SPSS easily for purposes of coding and cleaning. The process used in the NC 2172 Student Loan Experiment process (See Soo et al, 2016) will be employed again in this data collection effort. Survey Measures: Development of the survey instrument will be a collaborative effort of members of the research team in consultation with our advisors and theFamily Economics National Program Leader.

 

Major components of the model are: socialization factors, financial knowledge, information management, resources, psychological scales, demographic and economic factors, and measures of financial behavior and decision outcomes. Socialization includes questions about the influence of parents or guardians, whether parents or guardians faced health care/financial choices. It also includes exposure to sources of information, the amount of effort in seeking information, and attitudes toward money from observing others. Financial knowledge measures include understanding health insurance, billing cycles, emergency funds, and savings. Resources include current job status, job security, spouse or partner’s job status and job security, and emergency funds. Psychological measures include: measures of self-control, mental accounting, framing effects, and risk tolerance. Demographic factors include age and marital status of respondent, sex, education, race, health, and household size.

 

Data Analysis: Descriptive analysis will be used to examine the socialization factors, decision making outcomes, lifecycle stages, financial knowledge, resources, demographic characteristics, and measures of health care management behavior of the sample. Factor analysis will be used to examine the scales of the psychological constructs. Regression analysis and structural equation modeling will be used to examine the relationship among all of the factors in the model of financial decision making. The use of online survey and local smaller groups will help to maintain the cost-effectiveness of this research. Obtaining online samples is inexpensive and in person samples should require only modest incentives. Relationships with Center for Medicaid Services and the National Cancer Institute will be explored in an advisory capacity for this study. Previous data collection efforts were funded with small external grants and pooling Agricultural Experiment Station funding from members of the multistate research team. 

Advantages for doing the work as a multistate effort

This team has over a decade of successful collaboration bringing different skills and expertise to the table. This allows for pursuit of mixed methods as well as working to establish robust multi-state samples for qualitative and quantitative studies. In addition, we have identified various strengths of team members, which serves to expedite our efforts and avoid time loss as a result of improper task assignment. For this project we will also be able to leverage collaborators from our respective campuses, mainly from areas of public health or healthcare administration. Several team members have experience creating surveys and collecting data to examine issues and relationships between disease prevention and knowledge and use of health insurance (Dr. Kim, Koonce, Chatterjee).  Some institutions (South Dakota State, NORC, Purdue, University of Maryland, University of Georgia) are participating in a Culture of Health Pilot project funded by the Robert Wood Johnson Foundation; this could create unique opportunities as the two projects proceed. We also have many team members who have rich and successful extension program experience (Drs. Johnson, Saboe-Wounded Head, Kiss, Bartholomae Kim, Koonce, Sherido, Gutter, Bowen). Our team will be working together to present our work at relevant conferences, publish in relevant journals, prepare web sessions to share our findings with affiliated groups, and engage in outreach through new extension programs in many of our respective states.

Michael Gutter, Ph.D., Associate Dean, University of Florida has been part of and helped lead previous multistate teams focused on savings behavior (1013, 1172) as well as behavioral economics and decisions related to education and housing. In addition to his work with these teams over the years he has also conducted research on financial socialization, decision making under uncertainty, and racial differences in financial behaviors. His work has utilized quantitative, focus groups, experimental design utilizing both online and paper surveys. He will also work with research design, survey creation, experimental design, and project partnerships. He will also contribute to data analysis, authorship on reports and papers. Gutter is currently working with the Cancer Population Studies group at UF and will be working to explore financial burden of chronic disease management. Gutter will work with team to utilize the results of this research to develop new ideas, programs, and trainings for Extension faculty.

Yilan Xu, Ph.D., Assistant Professor, University of Illinois, will serve as the chair of the research group from 2018 to 2020. She has contributed to the team’s most recent publications on housing, retirement, and student loan decision-making. She will lead the team’s efforts in designing the final research protocols, conducting the data analysis, and composing final project outputs. She will implement quantitative, focus groups, experimental research designs and conduct data collection/focus groups/ face-to-face experiments with subjects in Illinois as needed.

Carrie Johnson, Ph.D., Assistant Professor, NDSU, will serve as the vice chair of the research group from 2018 to 2020. She will assist in the development of survey instruments, conduct focus groups if/as needed, write and disseminate research findings.She expects to summarize relevant and recent literature and conduct meta-analysis on basic, applied empirical work related to consumer issues related to health care financial management, develop outreach publications on best practices, design and implement experiments and other qualitative and quantitative methods of data collection, write/publish manuscripts and outreach publications, and submit proposals for presentations.

Lorna Saboe-Wounded Head, Ph.D., SDSU, will serve as the secretary of the research group from 2018 to 2020. She will contribute to literature review, study design, analysis of data, writing. She plans to implement findings from research into extension programming designed to meet the needs of consumers.

Elizabeth Kiss, Ph.D., Associate Professor, Kansas State University, will participate in work related to Objectives 1 through 4. Specifically, Kansas will examine practitioner and consumer perspectives on the intersections of health and financial wellness. Dr. Kiss will work with a variety of methods including facilitated discussions, focus groups, and surveys. Kansas will be a leader in the efforts to examine practitioner and consumer perspectives through facilitated discussions and development of frameworks. Kansas will assist in the development of survey instruments, data collection, and analysis related to consumer decision-making processes involved in choosing and using health insurance. These research activities will lead to actionable information that can be translated into programmatic efforts targeted to consumers, professionals, and communities seeking to increase the number of Americans who are healthy and financially well at every stage of life. 

 

Suzanne Bartholomae, Ph.D., Assistant Professor, Iowa State University, Iowa State University will contribute to the development 1) of a framework that intersects consumer behavior related to health and financial decisions and 2) applied research using secondary datasets that examine health and financial literacy (for example, National Financial Capability Study, Wisconsin Longitudinal Study). Dr. Bartholomae will also work with other Extension specialists to create related programs in the area of consumer literacy.

Joan Koonce, Ph.D., Professor, Extension Financial Planning Specialist at UGA, has done work in the in the area of health insurance literacy and its importance on obtaining and maintaining proper health care.  She is very familiar with literature on health insurance literacy and its impact on consumer health care decision making.  On the proposed project, Dr Koonce will assist with summarizing literature on consumer issues related to health care and financial management and developing Extension publications and other educational resources to assist consumers in using their finances and health insurance to make informed and good health care decisions.  She will also design methods of data collection to examine consumer issues related to health care and finances.  Because she is Extension faculty and is familiar with submitting presentation proposals to Extension conferences and publishing in Extension journals, she will take the lead on these efforts.

Sheri Worthy, Ph.D., Professor, has been part of the NC2172 multi-state research group over the past nine years. She has been involved in investigating the psychological and economics factors related to saving, and behavioral economics, financial decision-making and information management across the lifespan. As part of this project she will studying consumer health and well-being—a study at the intersection of healthcare and financial decision making across the lifespan. She plans to contribute in the following ways: : a) help in summarizing relevant and recent literature in these areas and will help in developing outreach as well as peer reviewed publications on the best practices; b) offer his expertise in project evaluation, econometrics, and empirical research in designing experiments and other qualitative and quantitative methods of data collection related to health care financial management; c) help in linking health care financial management to housing and retirement decisions by fielding experiments and analyze; and d) Conduct meta-analysis. Write/publish manuscripts and outreach publications. Submit proposals for presentations.

Swarn Chatterjee, Ph.D., Associate Professor, has been involved in researching the association between financial decision making and health outcomes of households. Dr. Chatterjee has been actively involved in researching and collaborating in studying the association between financial constraints, financial capability, and issues such as health insurance literacy, adverse effects of financial strain on physical and mental health of households, and the consumer choices made related to shopping and food purchase behavior of households receiving SNAP benefits. As part of this project he will help in studying the financial preparedness health outcomes and aging in place of rural households. He will participate in this project in the following ways: a) help in summarizing relevant and recent literature in these areas that focus specifically on consumer issues related to healthcare and financial management and will help in developing outreach as well as peer reviewed publications on the best practices; b) offer his expertise in project evaluation, econometrics, and empirical research in designing experiments and other qualitative and quantitative methods of data collection related to health care financial management; c) help in linking health care financial management to housing and retirement decisions by fielding experiments and analyze; and d) Conduct meta-analysis. Write/publish manuscripts and outreach publications. Submit proposals for presentations.

Jinhee Kim, Ph.D., Professor, University of Maryland, has conducted extensive research on financial socialization, health insurance literacy, health literacy, and health care costs and economic strains and negative health outcomes. She also participated in the NC 1172 and 2172. Jinhee Kim will contribute to the online survey development, data analysis, and preparation of reports and manuscripts. The results will be developed into an in-service training for Extension faculty and presented for practitioners at the national conference. 

Nilton Porto, Ph.D., Assistant Professor, University of Rhode Island will be involved in future research on cancer patient financial decision making using his background in behavioral economics and household finance. His involvement should include helping design an online experiment, data collection, and data analysis as well as being co-author in future publications from this study.  In addition, Dr. Porto will also help devise new studies on the intersection of health and wealth outcomes such as savings trade-offs and anchoring effects for the next five years of the NC2172. As a board member of the Rhode Island Jump$tart Coalition for Personal Financial Literacy, Dr. Porto plans to present applied results from future NC2172 studies during the annual Financial Capability Conference. This conference is organized by the RI Jump$tart with support from Fidelity and other sponsors. Local personal finance teachers, practitioners, business leader, and other constituents attend the conference with interest on the topic.

Sharon DeVaney, Ph.D., Professor Emeritus, Purdue University and Editor of the Family & Consumer Sciences Research Journal, contributes by encouraging the submission of research findings and promotion of articles published in the journal. Two articles by NC 2172 authors were included in the “Top 10 Most Downloaded Articles during 2017” based on the Wiley Blackwell Publishing Annual Report. The topics were “Homeownership among Millennials” by Drs. Xu, Johnson, Bartholomae, O’Neill, and Gutter and “Understanding Student Loan Decisions” by Drs. Cho, Xu, and Kiss. Dr. DeVaney was recognized as a Master Mentor by the American Council of Consumr Interests at the annual conference

Soo Hyun Cho, PhD, Assistant Professor at California State University has been part of this multistate team in the past eight years.  She studies behavioral and psychological aspect of financial decision making including savings behavior, student loan decision making, and young adults financial management behavior. Her recent research includes financial stress and wellbeing among workers and college students. In this new project, she plans to contribute to development of experimental survey instrument, data collection, and dissemination of the results through publications and presentations.

Tim S. Griesdorn, Ph.D., Assistant Professor, University of the Incarnate Word, will contribute to research method and design as well as behavioral finance literature.

Travis Mountain, Ph.D., Assistant Professor, Extension Specialist and Assistant Professor at Virginia Tech, conducts research and Extension programming on financial wellbeing.  Dr. Mountain studies student loans, housing, Ag producer transitions, health interventions, student loans, and food security.   He will contribute to this project by 1) exploring financial expenditures and strain on cancer patients and 2) examining effective techniques for educating and motivating Agriculture producers to think about farm, land, and forest transition.

David A. Evans, Ph.D., Extension Specialist, Purdue University will continue to provide assistance to the multi-state research group through the development of survey instruments, including efforts to make research findings generalizable to the U.S. population or to specific state populations as necessary. Purdue University is dedicated to the study of health and wealth at the consumer level. Dr. Evans is housed in the Department of Consumer Science within the College of Health and Human Sciences. As a specialist he is positioned to leverage the intellectual property and human capital of both the college and the statewide Extension network. Whenever possible, Purdue will contribute to the translation of research findings to consumer friendly publications and other media as well as efforts to market the existence and successes of the multi-state group known to stakeholders and decision-makers.

Joyce Serido, Ph.D., MBA Associate Professor, Extension Specialist, Family Social Science University of Minnesota-Twin Cities studies financial behavior at the intersection of family processes and personal well-being, focusing on youth and young adults. She leads a multi-university multidisciplinary team, exploring the connections between financial parenting, financial behavior, well-being and young adult self-reliance. She will contribute to this project in data analysis, preparation of reports and manuscripts, and dissemination of findings in collaboration with Extension colleagues. 

Frances Lawrence, Ph.D., Professor, University of Missouri, conducts research related to health and wealth and is particularly interested in the use of earned income tax credit refunds. Prior to becoming involved in NC-2172, she was a part of NC-223/NC-1011, “Rural Low-Income Families: Tracking Their Well-Being and Functioning in the Context of Welfare” and NC-1171 "Interactions of Individual, Family, Community, and Policy Contexts on the Mental and Physical Health of Diverse Rural Low-Income Families.” She will bring her expertise in forming small teams of researchers to enhance the project’s research productivity, especially publications and presentations.

Angela Lyons, Ph.D., Associate Professor, University of Illinois at Urbana-Champaign, conducts research on emerging issues in international household finance and behavioral economics, with emphasis on economic and financial inclusion, poverty and wealth inequality, financial and digital literacy. This includes U.S. research directly related to the impacts of financial planning, counseling and education on households’ decision-making, financial security and health and well-being. For this project, Dr. Lyons will contribute by adding an international dimension to the project so as to put the U.S. findings into global context. She will write/publish research manuscripts, write/submit grant proposals, and present research findings at relevant national and international meetings.

Brandan Wheeler, Ph.D., Assistant Professor, Mississippi State University examines how finances influence couple relationships, specifically young adult romantic relationships. Following an informal pilot study conducted within a graduate level relationships course, he plans to contribute to the current multi-state project by designing a larger study examining various aspects of finances (attitudes, behaviors, current financial state) and young adult relationships, including relationship quality and relational processes.

Bidisha Mandal, Ph.D., Associate Professor, Washington State University, examines health care utilization behavior related to chronic conditions and potentially preventable hospital readmissions among low-income households and older individuals.  She will analyze medical claims data as well as survey data to study health care decisions, focusing on health literacy and financial strains.  She will publish research manuscripts, submit grant proposals, and present research findings at relevant national meetings. 

Angela Fontes, PhD, is the Director of the Behavioral and Economic Analysis and Decision-making (BEAD) practice area at NORC at the University of Chicago, and adjunct faculty (teaching courses in behavioral economics and public policy) at Northwestern University.  Her work centers on using decision science to better understand financial and health-related decision-making (frequently published in health focused journals, including Health Affairs).  At NORC, Fontes is involved in a number of experimental, quantitative and qualitative data collection efforts, and will bring this methodological expertise to the team.  For this project, Fontes will consult on data collection efforts, and make available the Financial Well-being and Literacy study data collected at NORC.  In addition, Fontes will assist with data analysis and research presentation (conference presentations and journal articles), as well as leverage NORC’s capabilities in marketing the work and grant writing.

 

Cathy F. Bowen, Ph.D., Professor, Consumer and Financial Issues at Pennsylvania State University, has been part of this multi-state team (NC1013, 1172) and served as the group leader from 2000-2012.   Bowen will assist with instrument development, critiquing the approach to research methods and review the literature on healthcare and financial decisions.    

 

Measurement of Progress and Results

Outputs

• Analyzed multi-method quantitative and qualitative results; manuscripts, outreach publications
• Recommendations for developing educational programs or materials to assist consumers in information management and improving the outcomes in decisions regarding health care decisions and paying for health care.
• Recommendations for policies related to health care financial management literacy

Outcomes or Projected Impacts

• Understanding barriers and motivators that influence the consumer decision making process
• Understanding the role of information management in the consumer decision making process.
• Understanding the role of economic stress on the consumer decision making process.
• Improve educational initiatives that will be expected to increase financial literacy and improve financial decision-making regarding health care decisions and paying for health care.
• Inform policy related to health care decisions and paying for health care.

Milestones

(2018):Summarize relevant and recent literature on basic and applied empirical work related to consumer issues related to health care financial management. Develop outreach publications on best practices.

(2019):Design experiments and other qualitative and quantitative methods of data collection related to health care financial management.

(2020):Field health care financial management experiment and analyze. Write/publish manuscripts and outreach publications. Submit proposals for presentations.

(2021):Link health care financial management to housing and retirement decisions by fielding experiments and analyze. Write/publish manuscripts and outreach publications. Submit proposals for presentations.

(2022):Conduct meta-analysis. Write/publish manuscripts and outreach publications. Submit proposals for presentations

Projected Participation

View Appendix E: Participation

Outreach Plan

The results of the study will be made available through articles in appropriate journal and conference proceedings and through refereed and invited presentations at local, state, regional, and national conferences. Along with the answers to the research questions, papers will focus on an explanation of the conceptual model, recommendations for educational curricula, and recommendations for future research. Because several team members hold Cooperative Extension appointments in their respective states, in-service workshops and related lay publications will also be developed and/or modified. This multi-faceted strategy will allow for wide dissemination of research results and subsequent outreach to diverse audiences across the country.

Organization/Governance

The Technical Committee follows a standard leadership structure and consensual decision-making process. The chair convenes the monthly conference call meetings and the annual meeting. S/he is the primary contact for the administrative liaison and NIFA representative. The secretary records minutes of the conference call meetings and submits reports required by AES. Co-chairs of the research sub-committee provide primary leadership and oversight to the research process, e.g. instrument development and liaison with the data collection agency and serve as co-principal investigators for any grant funding at their respective institutions. Various members assume leadership for specific tasks such as developing report drafts, meeting with funders, assembling data from members of the team, etc. A set of guidelines for data access, writing, and co­-authorship is under construction.

Literature Cited

1. Cho, S. H., Mountain, T. P., Porto, N., Kiss, D. E., Gutter, M., & Griesdorn, T. (2016). Experimental design to understand the student loan decision: A methodological note. Family and Consumer Sciences Research Journal, 45(1), 65-76. 
2. Cho, S. H., Xu, Y., and Kiss, D. E. (2015). Understanding student loan decisions: A literature review. Family and Consumer Sciences Research Journal, 43(3), 229-243. doi: 10.1111/fcsr.12099. Best paper in FCSRJ in Personal Finance/Consumer Economics.
3. Gutter, M.S., Lown, J. , Mauldin, T. , Solheim, C. , Worthy, S.L. , Dorman, R. … Gorham, E.  (2012). Exploring the relationship of economic, sociological, and psychological factors to the savings behavior of low‐to moderate-income households. Family and Consumer Sciences Research Journal, 41 (1), 86-101.
4. Hayhoe, C.R. & Gutter, M.S. (2012). Reliability of the scales in the NC1172 Complex Nature of Saving data set. Family and Consumer Sciences Research Journal, 40 (3), 284-294.
5. Johnson, C., Evans, D., Worthy, S., & O’Neill, B. (2016). Using virtual focus groups in Extension research. Journal of the National Extension Association of Family and Consumer Sciences. Available: http://www.neafcs.org/assets/documents/journal/2016%20jneafcs.pdf
6. Johnson, C., O’Neill, B., Worthy, S. L., Lown, J. & Bowen, C. (2016). What are student loan borrowers thinking? Insights from focus groups on college selection and student loan decision-making, Journal of Financial Counseling and Planning, 27(2).
7. Mountain, T.P. Gutter, M.S., Ruiz-Menjivar, J. & Copur, Z. (2017). Exploring the Role of Financial Disclosure Forms in Mortgage Type Selection. Journal of Financial Counseling and Planning, 28(2), 285-299. https://doi.org/10.1891/1052-3073.28.2.285
8. O'Neill, B., Xu, Y., Johnson, C., and Kiss, D.E., (2017). Twitter Chat as A Research Tool: A Study on Financial Decisions of Young Adults. Journal of Human Sciences and Extension, forthcoming.
9. Xu, Y., Johnson, C., Bartholomae, S., O’Neill, B., & Gutter, M. S. (2015). Homeownership among Millennials: The Deferred American Dream? Family and Consumer Sciences Research Journal, 44(2), 201-212. Best paper in FCSRJ in Housing.
10. Xu, Y., O'Neill, B., Gutter, M., Wounded Head, L., and Kiss, D.E., (2017). How Do People Make Retirement Decisions? working paper.

Attachments

Land Grant Participating States/Institutions

CO, GA, IA, ID, IL, IN, KS, MD, MN, MO, PA, RI, SD, TX, VA, WA

Non Land Grant Participating States/Institutions

Alabama A&M University, California State University, Emeritus Collaborator, NORC , North Dakota State University, University of the Incarnate Word