New research comparing "nudges" with cash incentives gives HR and benefits leaders a sharper way to budget for flu season, and a warning about the limits of cheap behavioral fixes
When employers went looking for ways to lift flu and COVID-19 vaccination rates a few years ago, many reached straight for cash. Amazon offered warehouse and grocery workers a cash incentive of $40 per shot, rising to $80 for a two-dose series, and rolled out on-site vaccination clinics to go with it. Payroll software firm DLGL Technologies went further, offering employees a bonus of up to $2,500 for proof of vaccination, as HRD reported at the time. Other employers skipped incentives entirely and simply mandated the shot, a route that has generated its own share of litigation.
New research suggests a good number of those employers may have reached for the most expensive tool in the box when a nearly free one would have gotten them most of the way there.
What the research found
A working paper circulated in July through the National Bureau of Economic Research, by economists John List (University of Chicago and Australian National University), Matthias Rodemeier (Bocconi University), Sutanuka Roy (Australian National University), and Gregory Sun (Washington University in St. Louis), pulled together more than 1,200 estimates from over 600 studies. The goal: compare "nudges" — reminders, scheduling defaults, and plain information campaigns — against traditional financial levers, such as taxes and subsidies, across five everyday consumer markets: cigarettes, alcohol, flu vaccination, household electricity, and residential water.
The standout number for anyone running a benefits or wellness budget: in the flu vaccine market, the average nudge — a reminder text, an opt-out scheduling default, or a short campaign on the risks of flu — lifted vaccination rates by close to 35% on average, per the paper's analysis of the underlying studies. By the researchers' calculations, that's roughly the same demand response you'd expect from making the vaccine completely free.
The researchers call this an "equivalent price change": how large a subsidy or tax would be needed to buy the same behavior change a nudge delivers for free, or nearly free. It turns a soft, hard-to-judge treatment effect into a dollar figure a budget owner can actually compare against.
It's not just healthcare
The pattern held well beyond vaccination. Household energy-saving nudges — mostly the "your neighbors use less than you" letters — produced an effect equivalent to an 11% tax on electricity. Cigarette-focused nudges (warning labels, quit-date planning prompts) matched a tax increase worth roughly $2.25 a pack, not far off today's actual average U.S. pack tax of about $3.01. Water-conservation nudges matched a 17% price increase, and alcohol nudges the equivalent of a 34% price increase, worth around $0.60 on a standard American drink.
Dollar for dollar, nudges also beat cash in every one of the five markets studied. In the flu vaccine market, a dollar spent on reminders generated more than four times the aggregate behavior change of a dollar spent on subsidies, according to the paper's cost-effectiveness estimates.
The catch benefits leaders will recognize
Being efficient per dollar and being large enough to hit an ambitious target are two different things, and this is where the paper gets genuinely useful for anyone who has watched a wellness pilot look great on a slide and then plateau — a tension HRD has explored before from the engagement side.
Once the researchers looked at total impact rather than impact per dollar, price-based tools usually won, because a tax or subsidy can be scaled in a way a reminder campaign cannot. In the energy market, the best achievable tax produced roughly seven times the total benefit of the best achievable nudge, even though the nudge remained the more efficient dollar at the margin. Price tools also out-totaled nudges, by smaller margins, for flu vaccine subsidies, water pricing, and alcohol taxes.
There is one notable exception: cigarettes. There, the paper finds nudges deliver more total benefit than a cigarette tax even before cost is factored in ($104 versus $69 per smoker per year) — the one market in the sample where the cheap tool wins outright, not just per dollar spent. A separate, and separately useful, finding: when the researchers account for the fact that actual US cigarette taxes are already close to the level they calculate as economically optimal, they find that piling more nudging on top of today's real-world tax rate can actually reduce welfare, because it pushes consumption below the optimum and erodes existing tax revenue. It's a useful caution against assuming more nudging is always better: once a lever has already captured most of the available gain, adding another one can do more harm than good.
What this means for a benefits budget
The lesson isn't to abandon incentive dollars, or to over-invest in them either. It's to be clear-eyed about which job a nudge is being asked to do.
If the goal is moving the willing-but-forgetful majority — employees who intend to get a flu shot, or would use a benefit if they remembered it existed — a free or low-cost nudge is very likely the more efficient tool, and this data says it isn't close. If the goal is a genuinely ambitious participation target, expect a reminder campaign alone to fall short, and budget a real incentive for the group it won't reach on its own.
One further wrinkle worth planning around: the paper finds that stacking a nudge on top of an already well-sized incentive buys very little extra, largely because the people who respond to reminders and the people who respond to money tend to overlap. Rather than deploying every available tool on a wellness goal at once, the more efficient approach the data supports is choosing the tool sized to the ambition, similar to the case for tracking ROI carefully rather than assuming more programming always means more return.
Nudge design matters, too, and generic reminders aren't interchangeable with well-targeted ones. Across the vaccine studies in the sample, plain reminders and opt-out scheduling outperformed general education campaigns; in the energy market, social comparisons beat generic conservation tips; in water conservation, asking people to commit to a specific target beat simply informing them of their usage. The design of the nudge does a lot of the work, not just the decision to use one at all.
A caveat worth keeping
The researchers flag their own limitation: published studies tend to over-report striking results, and the team found evidence of that kind of bias in the energy, cigarette, and flu vaccine literatures specifically. Correcting for it barely moved most of their headline conclusions, with one exception: the cigarette nudge's advantage shrank once bias-corrected, though it still outperformed the tax. It's a fair reason to treat any single number here as a well-informed estimate rather than a guarantee — in-house pilot data will still matter for any given workforce.
None of this settles the separate legal and ethical debate around vaccine mandates and incentive design that HRD has covered elsewhere. But for the more mundane, budget-line question of where the next flu-season dollar should go, the answer coming out of one of the largest reviews of this evidence to date is refreshingly simple: try the free reminder first, and know in advance exactly what a bigger incentive is buying before you spend it.
