When employers are trying to encourage workers to get more physical activity, offering a monetary award that can be lost if the goal is not met yields better results than a offering a bonus that can be gained if the goal is met, according to a new study.
"Most people assume that people are rational, but we know that this is not true. People are irrational but in predictable ways." said lead author Dr. Mitesh S. Patel of the Perelman School of Medicine at the University of Pennsylvania in Philadelphia.
Patel's group studied 281 overweight or obese adult employees who enrolled online. Participants reported their height and weight, and used a smartphone step-counter app to track their activity levels for 13 weeks.
On average, U.S. adults take about 5,000 steps per day. For this study, participants were given a goal of at least 7,000 steps per day and then randomly divided into four groups. One group received no incentives, another received $1.40 for each day they met the goal, another lost $1.40 from a monthly incentive ($42) each time the daily goal was not met, and the last group drew lottery numbers for a chance to win $50 which they could only collect if they had achieved 7,000 steps on the previous day.
All received daily feedback on their step count.
The loss-incentive group met their step goal on 45 percent of days, compared to 36 percent of days in the lottery group and 35 percent in the gain incentive group. Those in the comparison group with no incentive only met their goal on average 30 percent of days, the researchers reported in the Annals of Internal Medicine.
During the following weeks, when step count was still reported but no incentive was offered, step counts decreased for all groups.
"According to a few seminal behavioral economics experiments, people don't like losing something twice as much as they like gaining the same thing, as a rule of thumb," said Marc Mitchell of the University of Toronto, who was not part of the new study.
A more tailored design might have yielded different results - like if the researchers had measured how much each person was walking before the study and asked them to increase their step count by 2,000, rather than setting the same goal for everyone, Mitchell told Reuters Health by email.
"Just tracking activity using a smartphone or wearable device will help, but for those who are overweight or obese or have a chronic condition tracking alone is unlikely to boost activity," which is where a financial incentive comes in, Patel said.
"About 80 percent of employers in the U.S. use financial incentives of some kind in wellness programs," he said.
Most simply lower insurance premiums if employees achieve health and wellness goals, he noted.
Many are moving to more penalty based schemes given the short-term financial benefit for the company, but this may not be a good way of promoting quality health behavior change, Mitchell said.
"For most employer wellness programs around the country, you do something, you get paid for it," Patel told Reuters Health by phone. "Sometimes relatively soon, sometimes off into the future."
In this case, the gain and loss incentives were the same, only framed differently depending on the group, he said.
This technique of framing the incentive comes from previous work in behavioral economics, Patel said.
He added, "I think the evidence is clear, these financial incentives could be better designed if they were based on insights from behavioral economics."