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Do financial incentives improve health?

Ask the Doctor

couple exercising financial incentives
Most large employers now offer financial incentives to workers who make healthy lifestyle changes.

Q. My employer is offering employees financial rewards if we lose weight. At first, I was shocked by this, but then I thought it might be a good thing for me, and for my employer. Does this kind of financial incentive lead to healthier lifestyles?

A. Offering financial incentives to employees for making healthy lifestyle changes is increasingly common: nearly 80% of large employers now do it. There are many ways to offer incentives, and doctors and economists are learning what works best. Some experiments have been successful. For example, employees at two large companies who were randomly selected to receive up to $800 to quit smoking were three times more likely to quit than employees encouraged to quit but not given money for doing so. However, other experiments have not worked as well. For example, employees selected at random to receive a bonus of $550 to lose weight were no more successful than employees not offered a bonus.

The timing of when the bonus is given appears to affect behavior change. People who receive payments separately (rather than lumped in with their paycheck) and repeatedly (like every month rather than just at the end of the trial period) are more responsive to incentives. Also, how the incentive is provided may affect a person’s response. For example, over three months employees were given an incentive of about $1.50 each day they walked at least 7,000 steps (as measured by their smartphones). Some (chosen at random) received $2 every day they walked 7,000 steps. In contrast, others were given a “bank account” full of all the money they might win if they walked 7,000 steps each day and then had $2 taken away every day they did not walk 7,000 steps. Both types of incentive worked better than no incentive, but the latter way-losing money you would have won-proved more powerful.

There is some evidence that incentives work better when offered to groups of people all challenged to adopt healthy lifestyle habits, rather than on an individual basis. And financial incentives may work best when the incentive is tied to the group’s success: individuals who fail to meet their personal goal know they are also reducing the bonus that others in their group will receive, and possibly discouraging their coworkers from succeeding.

Assuming that financial incentives will generally help people to adopt a healthy lifestyle, it remains unclear how durable this behavior change will be. And it remains very unclear whether the savings to employers from reduced medical expenses due to healthier lifestyles will be greater than the money spent on the incentives. Still, since we humans surely do respond to financial incentives, it’s worth seeing if such programs will achieve the goals we all seek: better health and lower medical costs.

— Anthony Komaroff, MD
Editor in Chief, Harvard Health Letter

Posted by: Dr.Health

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