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Justin Sydnor

Building Healthy Habits? Money as a Motivator

by Justin Sydnor Thursday, March 22, 2012

Most people know that regular physical activity brings health benefits and reduces the risk of chronic diseases. And yet, according to the Centers for Disease Control and Prevention (CDC), two out of three Americans don’t engage in regular exercise. Although we are aware that exercise is good for us and many of us want to enjoy the benefits of being physically fit, it is hard to get started on an exercise routine and even harder to stick with it.

In the U.S., low levels of exercise also present an important policy issue. Americans’ widespread lack of physical activity likely contributes to poor population health and rising health-care costs. In response to these concerns, policy makers, employers and insurance companies are increasingly interested in using incentive programs to encourage people to adopt healthier behaviors, such as regular exercise. Approximately 40 percent of large employers in the U.S. offer some form of incentive-based wellness program. If they are effective, these incentive programs could promote healthier exercise habits, leading to improvements in both individual well-being and social welfare. But do employee wellness programs work?

With funding from the National Science Foundation and the Upjohn Institute, my colleagues and I studied the effectiveness of financial incentives in motivating people to adopt new (healthier) behaviors. We conducted a large-scale field experiment at the headquarters of a Fortune 500 company, examining the effect of financial incentives at encouraging exercise among employees. One group participated in a one-month incentive program in which they could earn $10 per visit to the on-site company gym. In addition, at the end of the one-month program, half of this group was offered the opportunity to write a self-funded “commitment contract” for continued exercise at the company gym. In these contracts, employees put money on the line that was forfeited to charity if they failed to use the gym regularly.

So, what did we find? First, the individuals who earned money each time they exercised did use the gym more often during the one-month incentive program.  Furthermore, these individuals continued to use the gym at slightly higher rates even after the incentive program ended.  However, the effect for this group gradually dissipated after the program’s conclusion.

Second, an interesting finding was that the post-incentive effects were much stronger for people who had the opportunity to write commitment contracts at the end of the financial incentive program. Around 20 percent of employees in this group decided to put money on the line for a commitment and on average, this group was considerably more likely to participate in regular exercise over the first two months after the financial inducement ended. While individuals in this group also experienced a decline in regular exercise after the program’s conclusion, this dissipation was slower than for the individuals who only received financial incentives.

The results of our research have important implications for organizations wanting to promote healthy behaviors among their employees.  Our work suggests that the offer of a temporary incentive for the desired behavior (exercise, in this case) can have a lasting effect.  However, our research shows that coupling a financial incentive program with an option for people to make written commitment contracts substantially improved the long-run effects of the program, helping individuals move along the path toward building healthier habits.