Department of Economics

Can incentives be effective when trying to encourage the development of good habits? We investigate the effect of paying people a non-trivial amount of money to attend an exercise facility a number of times during a one-month period. In two separate studies, we find that doing so leads to a large and significant increase in the average post-intervention attendance level relative to the control group. This result is entirely driven by the impact on people who did not previously attend the gym on a regular basis, as the average attendance rates for people who had already been using the gym regularly are either unchanged or diminished. In our second study, we also obtain biometric evidence that this intervention improves important health indicators such as weight, waist size, and pulse rate. Thus, even though personal incentives to exercise are already in place, it appears that providing financial incentive to attend the gym regularly for a month serves as a catalyst to get some people past the threshold of actually getting started with an exercise regimen. We argue that there is scope for financial intervention in habit formation, particularly in the area of health.