Thursday, December 27, 2007

How to stick to your New Year's resolutions

Soon is the time to make resolutions, and like most resolutions, they will fall to the wayside within days or at best weeks. Now, how could Economics help you? is run by a group of faculty at Yale University following on a very simple principle: if nothing tangible is at stake, there is little incentive to stick to a resolution. However, if you have committed to some amount of money, then the thread of losing that amount will make you stick. Thus, at, you set a price and a deadline for a goal, typically losing weight. If you succeed, and independent auditor verifies your claim and you are home free and happy. If not, you have to pay in your collateral, which will then be forwarded to a charity. If you are wondering, the website hopes to make money from ads, in particular for weight loss (surprise...).

Will this work? It is clear that once money is at stake, anybody is more careful. Just think about all the liability threats and how they restrict actual behavior. There are, however, a few issues with the case at hand:
  1. How can such a contract be enforced? This looks like a big hassle will face once it has to collect money from people who cannot commit. If they cannot commit to losing weight, aren't they also likely not be able to commit to paying?
  2. Would courts accept this as a valid contract? Indeed, it seems to be quite one-sided. I am no lawyer, but it looks like is not providing a service when it asks for payment, as the person has not lost weight...
  3. It is not clear how the auditing could be performed at low cost.
  4. A payment to charity may not be a sufficient incentive to stick to a resolution. A much better deterrent would be a payment to, say, your mother-in-law, the Mafia or your local property owners association. This would, by the way, also take care of the auditing.
At least this is a start. Let's see how it works out. But, at the time of this writing, the scheme is not yet functional and the busiest time for resolutions is approaching fast. I wonder how the founders have committed to that deadline.


bncthor said...

..."then the thread of losing that amount will make..."

And, so will the threat.

Not fat said...

There is a Washington Post article that makes a somewhat similar statement: paying people to lose weight is much more effective that resolutions. It also mentions