Financial Incentives for Healthy Behavior: Rewards vs. Penalties

CRegal Editor
  • Would you work out more if someone was paying you to do so?  If someone promised you X amount of money to promise to go to the gym a certain number of times per week, would you take them up on the offer?  And more importantly, would that money be a motivating factor to keep you engaged?


    What if someone asked you to put a sum of money down, and if you don't meet you work out goals, you lose that money?  But, of course, if you do complete your goals, you get that money back?


    What if your job offered you incentives to encourage you towards a healthier lifestyle?  Would you be motivated to eat better and exercise more if your job gave you gift cards, discounted gym memberships or other prizes for living healthier?  What if you were penalized for unhealthy behaviors?

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    With the obesity rate reaching 26.2 percent nationally – and considerably higher in certain parts of the country – many companies have turned to creative solutions to encourage people to live healthier lifestyles.


    From a business's point of view, workers may be encouraged to enroll in a corporate wellness program in the hope that investing in healthy behavior now will save health care costs in the future.  With high rates of heart disease, high blood pressure, osteoarthritis, diabetes and a myriad of other conditions associated with weight management and healthy lifestyle choices, many corporations have found ways to spend in the short term to avoid costs in the long term.  At least that's the thinking, though a recent study in Health Affairs says that savings do not come quickly under this logic


    In my personal experience, a former employer offered a wellness program.  On one hand, admitting that you are a smoker would increase your health insurance premiums – a penalty for engaging in behavior detrimental to your health.  On the other side of things, the company rewarded healthy behavior with quarterly gift cards to Target if particular goals were met.  Goals included consuming a certain number of glasses of water in a day, avoiding fried foods for a given day, walking a certain number of steps or going to the gym.  Points were rewarded for each behavior and tallied at the end of the month; if a threshold was met over the course of the quarter, a prize would be distributed.  Though I partook in the activity, many others did not.  It seemed that the small bonuses offered may have been lost on those who were at highest risk to cost the company money in the long-run, namely overweight and older individuals. 


    What if, instead of an employer-managed program, you were to take on the responsibility of a risk-reward system on your own?  Numerous websites and smartphone apps are doing just that, including GymPact and Lose It or Lose It. 


    GymPact ( involves "pledging" a certain number of work outs per week, and if you meet your goals, you get money.  However, if you don't meet your goal, you have to pay in a self-imposed penalty.  Friends who use the program have pledged that they will go to the gym three times per week, with a $5 investment if the goal is not met, for example.  Rewards are paid out from the pot of money collected for all unmet exercise pledges across the website.  For example, if 100 people each pledge $5 to work out, and 10 people don't meet their goals, their $50 contribution is divided across the 90 who did meet their goals. 


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    GymPact links up with your smartphone, where GPS tracking logs when you are at the gym.  One friend pledged $5 to work out three times per week, and he gets paid roughly $.32 per gym visit.  The more work outs you pledge, the more money you can make – those who pledge five or six gym visits walk away with about $2 a week.  Multiply that across a year, for example, and you're talking about an extra $100.  As one friend who uses the program stated, "I could see how this program would motivate people who don't work out - no one likes to lose money."


    Lose It or Lose It works in a similar way, though it involves weight loss goals instead of tallying gym visits.  The thought process is simple – either lose the weight you set as a goal or lose the money you pledged.  There are weekly goals and program-length goals (10 weeks), and money can be kept or lost at each juncture.  However, unlike GymPact, the money lost is not part of a redistribution plan – instead, the website keeps your money.  Instead of rewarding good behavior, this program penalizes the bad.  As stated in the promotional video for the website, "It's a lot easier to put down that bacon cheeseburger when you know there is $50 on the line." 


    Which is a stronger incentive to keep you active: rewards or penalties?  Would these incentives help keep you moving?

Published On: March 07, 2013