The Structure of Health Incentives: Evidence from a Field Experiment

A growing number of firms use incentive programs to encourage healthy behaviors, but there is little evidence about how such incentives should be structured over time. We explore this issue using a large field experiment that incentivized employees of a Fortune 500 company to use their workplace gym. We compare the effectiveness of a treatment with constant incentives over 8 weeks to two treatments that varied incentives over time. One variable treatment featured front-loaded incentives, which could, in theory, help procrastinators overcome startup costs to joining an incentive program. We find, however, that the front-loaded incentive did not increase participation on the extensive margin relative to the constant incentive and was less effective in sustaining exercise over time. The second variable incentive was designed to leverage short-term habit formation by turning incentives on and off over a longer period of time. This novel sporadic incentive showed slightly stronger effects than the constant incentive. We discuss how the nature of habit-formation processes affects the relative benefits of consistent versus periodic incentives. This paper was accepted by Uri Gneezy, behavioral economics.