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Losing weight is hard, but receiving a cash reward for shedding pounds can make the task a whole lot easier to swallow.
That’s the conclusion Joshua Price, assistant professor of economics, reached in his recent study for The Journal of Health Economics. He and co-writer John Cawley, a professor at Cornell University, found that financial incentives can be a very useful tool for companies that offer wellness packages for their employees.
“We examined how effective different weight-loss programs are to businesses,” Dr. Price says. “The best results were those that had a more regular payment of refundable participation fees. The payments seem to work as reinforcement for people to continue to lose weight.”
Price and Dr. Cawley were given access to the outcomes of 2,635 workers at a company. They studied four weight-loss options provided in its wellness package to employees. Option one allowed employees to join a weight-loss program for free and paid them at the end of the year if they lost weight. Option two required employees to pay to join the weight-loss program, then paid a refundable bond or rebate at the end of the year based on how much weight they lost. Option three was similar to option two, except that the funds were given every quarter. And option four was the control group, with no financial component.
The researchers found that individuals who were asked to put up their own money, either with a deposit contract or refundable participation fee, experienced more weight loss than those in the control group.
“In option two, we also discovered that the large incentives to lose weight at the end of the year created unintended consequences, like employees using unhealthy weight-loss methods before the last weigh-in,” Price says.
Rachel Croson, dean of the College of Business, says Price’s work makes useful recommendations based on behavioral economics.
“Finding creative ways to improve our health is increasingly important as we continue to struggle with health care costs,” she says. “With this research, we can identify which types of financial incentives work best. When employees lose weight, both they and their employers win.”
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