Wednesday, April 1, 2009

A little money gets people to exercice in the long term

Sometimes, small incentives can bring great rewards. Think for example about the 10 cent toys some fast food outlets give to children in return of the loyalty of a whole family (and a lifetime of business thereafter). One could equate this to the little tryout that tips you into an addiction, providing great returns to the provider of the initial investment. But can we obtain such behavior on a more positive side?

Gary Charness and Uri Gneezy show that giving people a monetary incentive to attend a gym for a month will make them more likely to attend thereafter. They claim that a non-trivial incentive managed to create a good habit, but one can also view this incentive to be relatively small compared to the present value of future benefits from going to the gym.

It looks like context matters. People already were aware of the benefits, they just needed to overcome some fix costs to try and the incentive was sufficient. But the more interesting aspect of the study is that compared to a control group, those who received incentives for a sufficiently long time then kept going to the gym thereafter, thus a habit was created. But it looks like this habit was already underlying, waiting to awakened. Why would this habit be stronger with the monetary incentive?

The experiments were carried out in Chicago and San Diego. In particular in the second location, there is a culture centered around the gym: it is the place to be, the meeting place. There is something of an expectation in California that everybody respectable goes to the gym. What does this mean for this study? The peer pressure to go to the gym should not be different according to the receipt of an incentive or not. But does the feeling of guilt about not going to the gym become stronger if you used to be paid to go?


Mike Fladlien said...

Do you think that small incentives will get students to work more productively in class until it becomes a habit? I think students want to learn just like most people want to exercise, but they need a push. Dogbreath

Michelle Schaeffer said...

I think that with students, it's the fear of failure that ultimately pushes some to not be productive in and out of class. These are theoretically the ones that you want to give incentives to.

There is already a large network of incentives set up for students to do well, we call them grades. Unfortunately, some students don't value these grades at market value and the incentives lose their power.

The problem is the old saying, "C's get degrees" and it's true. Unless a student plans to go on to grad school, there is no incentive (other than personal satisfaction) of expending energy over and above the requirements of getting a C.

A monetary incentive already exists in some universities (automatic enrollment for scholarship money if over a certain GPA) but this is unavailable to those who aren't close to that GPA.

I don't know what the answer is to this but those are my thoughts.