It is one of the most basic ideas in economic theory: you are less likely to buy something if the price is higher. Obviously, we avoid buying expensive items because we want to save our money for other things. But there is more to it than that. We have all had the experience of avoiding something expensive even when someone else is paying. Minimizing costs is not just a matter of having more money in a personal sense, but also seems to be related to the idea of winning — the basic drive that leads you to perform well in a video game or another context where your results are being accurately measured. You will want to do things efficiently and produce good results even before you stop to ask who will be paying the price.
I remember noting this when I saw college professors going to some trouble to select less expensive textbooks, even though it would be the students, not the professors, who would be purchasing the books. The same effect works when doctors select medical tests for patients, according to a study. The study was published in November 2013, and I found the story in HCP Live:
Most of the time, U.S. doctors don’t know what the lab tests they order will cost. When computers running electronic health record (EHR) systems showed current indicative pricing for lab tests to doctors, most doctors ordered fewer and less expensive tests. The study looked at only 27 common laboratory tests out of the hundreds of routine medical tests. The cost savings were slight, about 11¢ per patient visit, but they would add up quickly if measured across the whole range of medical tests.
This kind of effect shows the advantages of better decisions when people know more about the costs of the resources they are using. Part of the challenge in improving the efficiency of work is having more and better information about costs readily available for people who will be making decisions that involve the use of specific resources.
