As someone who sells life insurance for a living, I spend a lot of time thinking about human behavior, especially behavior that leads to the decision to purchase or not purchase life insurance.
When I first entered the life insurance business, I thought that accurate and pertinent information would lead to behavioral change. That is, if I provided prospects with information that showed how life insurance would benefit them and their heirs, they would buy.
I probably don’t have to point out how incredibly altruistic that concept is. A quick glance at the statistics about the percentage of uninsured Americans will show how just how wrong that notion is. But it applies to many areas other than life insurance.
For example, in the 1960s, the first warning labels appeared on cigarette packs, and they proceeded to get more specific. But the warnings themselves failed to produce any meaningful change.
So how did we go from almost 50% of the adult population smoking in the 1950s to about 20% now? A combination of three things produced the change. First, the taxes on cigarettes skyrocketed. A pack that cost 35₵ when I was in high school now goes for about $10 in NYC, with most of the increase attributable to taxes. Second, we demonized smokers and the secondhand smoke they generated, and third, we greatly reduced the number of places where smoking is permissible.
What about seatbelts? Again, it wasn’t information that produced the behavioral change, it was legislation. And it’s the same with food labeling. NYC’s law mandating the disclosure of calories on each menu item has produced no discernible effect.
Now I am NOT suggesting that we need legislation mandating the procurement of life insurance. I believe we have already met our quota of stupid laws on the books, so there’s no need in adding another.
I do believe we need to open people’s eyes to the detrimental effect rationalizing one’s decisions can have. However, I’m not sure of the best way to accomplish that.
For my small part I tell people that it is more responsible to make an active decision than a passive decision. With regard to life insurance, an active decision would be “no, I don’t believe this is right for me,” whereas a passive decision would be “I want to think about it” and then giving it no further thought.
Human behavior is a fascinating field and if you’d like to learn more, Dan Ariely and Richard Thaler have some excellent books on the topic.
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