Can Money Buy Good Health? – RCT of Financial Incentives for Weight Loss

In 2004, roughly 71% of Americans were overweight or obese. In addition to the toll this takes on individuals’ wellbeing, the alarming statistics highlighted a looming public health crisis for policy-makers, as potential costs for obesity-related illnesses mounted. Seeking to apply lessons from behavioral science, Volpp and co-authors (2004) [1] designed a now-famous study to see if monetary incentives could help people lose weight.

In economics parlance, the term present-bias refers to our natural tendency to attribute greater value to immediate benefits over future ones. For example, we might indulge ourselves with a greasy cheeseburger, ignoring how doing so might affect how we’ll feel tomorrow (let alone our long-term heart health). Understanding this phenomenon, the authors wondered if this very same tendency could be exploited in the service of promoting healthy behaviors. Accordingly, this hallmark study investigates whether daily payments can help people combat their present bias, opting instead for behaviors that promote long-term wellbeing.

Specifically, the study aimed to answer the following question: can offering day-to-day monetary incentives help individuals lose weight?

To answer this question, fifty-seven individuals between the age of 30 and 70, all of whom were classified as medically obese, were recruited and randomly assigned to one of the following experimental groups:

Methodology: After random assignment, participants were part of either a control group (which received no monetary incentives) or one of the two financial incentive programs described above (lottery or deposit contract). In the lottery group, when the participants did not win, they were informed of how much they could have won. Knowing about their loss, the experimenters harnessed individuals’ tendency to avoid losses (i.e. loss aversion) in this group design.

In addition to the 16-week program, the researchers followed up with members of the three groups 7 months after it began (i.e. three months after finishing the program), in order to see the extent to which the target weight was sustained.

Results: After 16 weeks of the program, participants in both incentive groups lost roughly three times more weight than their counterparts in the control group.

Results. Mean weight loss at 16 weeks in three groups.

However, participants in both incentive groups gained weight between the end of the program and the 7-month follow-up, showing that although the financial incentive resulted in significant weight loss during the program, participants did not succeed to maintain their weight 3 months later. That is, while the payments were able to help combat present bias while they were received, people reverted back to their prior habits when the incentives were removed. The results were as follows:

Results. Weight loss in three groups from enrollment to 7-month follow-up

Legacy: While the results were mixed — in that the treatment only worked so long as payments were maintained — this study showed that financial incentives can help people overcome their present bias. Indeed, the study has since inspired other weight loss efforts such as Diet Rewards [2], the reality show The Biggest Loser [3], and a health company, Healthy Wage [4]. Moreover, a host of follow up research has added to our understanding of how incentives can be used to overcome myopia and engender behavior change. For example, the results of a 2016 study by Patel and co-authors [5] showed how the form in which the incentive is delivered impacts its effectiveness. Therein, the authors attempted to proxy the effect of a monetary incentive by reducing participants’ premium charges for their healthcare plans in the following year, or a similar daily lottery entry — but found that none of the incentives work. Thus, as the authors note in their summary, both the size of the incentive and the means of delivering it, are critically important to these interventions. One possible reason for the failure of the lottery is that participants would not get informed about their potential loss if they did not participate in the lottery. Or, in other words, individuals’ loss aversion was not harnessed, demonstrating the importance of applying this principle in the context of weight loss.