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In the quest for a healthier work force and lower health care costs, many employers offer their workers financial incentives to quit smoking, lose weight, exercise more, and the like. But many of these programs don’t work.

“The cart has gotten way ahead of the horse with incentive programs,” said Dr. Jeffrey T. Kullgren, a research scientist at the VA Center for Clinical Management Research in Ann Arbor, Mich. “Many of the options that industry has tried have had surprising, disappointing, or even unintended consequences.”


A new report from the University of Pennsylvania points to an approach that does work — the threat of losing money — at least in the short term.

Researchers recruited 281 overweight adults, all employees at the university, who were interested in exercising more. Using a smartphone app called Moves, the workers tracked their activity, aiming for 7,000 steps a day. The researchers split the participants into four groups. Each received one of these incentives:

  • occasional text messages (this was the control group)
  • earned $1.40 for hitting a day’s activity goal
  • a chance to bet on a lottery to win $5 or $50 for hitting a day’s activity goal
  • lost $1.40 (from a monthly pot of $42) every day the step goal wasn’t met.

All three of the financial incentives could have cost the employer the same amount, $9.80 a week.


The loss incentive worked best. Participants in that group met their step goal on 45 percent of the days during the 13-week trial, compared to 30 percent in the control group. The other two incentive groups did somewhat better than the control group, but the differences weren’t statistically significant. The report appears in Tuesday’s Annals of Internal Medicine.

The results weren’t a complete surprise. Earlier randomized controlled trials from the Penn team showed that the threat of losing money also worked for losing weight and quitting smoking.

“We know that financial incentives can help people change their behaviors,” said lead researcher Dr. Mitesh S. Patel, assistant professor of medicine at the University of Pennsylvania. “Now it’s time to apply the ones that work, like the possibility of losing money, to bigger groups of people.”

Dozens of companies such as have developed incentive-based employee wellness programs, as well as programs for individual consumers.

“We ask people to put up their own cash as a motivator to make a change,” said CEO Jordan Goldberg. “The threat of losing something you already own is far more motivating than the lure of gaining something you never had.” As of today, members of the website have wagered more than $24 million on everything from losing weight to quitting drugs and learning a new language.

One of the company’s most successful models is the anti-charity, said Goldberg. If you believe in gun control, for example, your money goes to the National Rifle Association if you don’t meet your goal.

Beyond incentives

Financial incentives may work in the short term, but the behaviors they motivate often fade when the incentive disappears.

“The next step in this work is to find ways to convert external incentives into intrinsic motivators,” said Michael T. Ford, associate professor of psychology at the University at Albany, SUNY. Motivation that comes from within tends to be more meaningful to an individual, and lasts longer. So far, though, that conversion has been difficult to engineer.

Linking financial rewards to more deep-seated goals and beliefs, like spending more time with a spouse or saving for college tuition, may be one tactic, said Kullgren. “However we manage to do it, sustained behavior change is the holy grail we are looking for when it comes to incentives,” he added.

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