But it’s not just a matter of doling out cash for dropped pounds: Sites and programs must also consider the way in which they implement incentives in order to achieve the maximum effect. “Behavior change is very difficult and financial incentives show tremendous potential; however, the programs have to be very carefully constructed to get the desired results,” says David Roddenbury, founder of one of the first financially incentivized diet websites, HealthyWage.
Though research is still being conducted in this area, the field of behavioral economics sheds some powerful insight. At Harvard Business School, research conducted by Leslie John, Ph.D., has shown that it’s possible to exploit people’s decision biases, such as overconfidence in their ability to shed pounds and an aversion to losing money, to help them adopt healthier behaviors. “The general approach we’ve been taking in the studies is to use people’s decision errors in their favor,” says John. In other words, they’re helping people help themselves. “People tend to put more value on avoiding loss than gaining something,” notes John. “So instead of just awarding people with money for weight loss, we had them put their own money down.”
John said that this method took advantage of those two big decision errors: aversion to losing cash and overconfidence. “People hate losing money, so this propels them to drop the pounds,” says John. “And people are overly optimistic about their ability to lose weight, which increases the likelihood that they will put money down in the first place.”
In a four-month-study, John found that the control group, which they paid in a way that leveraged decision errors, lost 14 pounds, while the group in which those decision errors weren’t used to an advantage only shed four pounds. Over at HeathlyWage, Roddenberry reported that those who invest their own money are more than five times as likely to win the weight-loss challenges than those who don’t invest. “Monetary awards are motivating, but what’s also important is the way in which the incentives are implemented,” says John. “To pay someone in a way that leverages their decision errors, at least over a short period, is incredibly powerful in inducing behavior change.”
Another crucial factor in the process is immediate gratification—dieters need their rewards and they need it now. This is why many company programs that offer health care premium adjustments at the end of the year for weight loss are not maximally effective. “The effectiveness of rewards decreases with the delay in paying them,” explains Cawley. “One can imagine an ATM built into a BIA [which calculates body composition] or DXA [bone density scanning] device that spits out money when the participant is confirmed to have achieved their fat loss or muscle gain goals. Immediacy of payment matters.”
Rosen found this to be true while testing DietBet with beta users. “Other diet bets are typically 90 day challenges (or longer),” he says. “We found from firsthand diet betting experience that short, manageable games are much more motivational.”
But while financial incentives work well in triggering weight loss, they are not so successful in the long haul. This comes as no surprise, considering that the hardest part of any weight loss program is not just losing the weight, but keeping it off. “We found incentive schemes to be very effective in inducing short-term weight loss for four to six months,” notes John. “But once we removed the incentives, there was substantial weight regain.”
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