Employers pay people to meet sales goals, hit productivity targets, put in overtime. It works — people show up, do what they need to do and collect a paycheck. It’s the way of capitalism, and it’s woven into the very fabric of every business transaction.
By that logic, paying people cash incentives to lose weight, quit smoking, lower their blood pressure or engage in other healthy behaviors also should “work”.
But it doesn’t. Or at least, not in the long run.
In a study conducted by Carnegie Mellon University, obese U.S. military veterans were paid to lose a pound per week for 24 weeks. Eight weeks after the incentive program ended, the vets had regained the weight they had lost.
Why would employees behave this way? Why not get paid for doing something that is also beneficial to them?
Dan Ariely, a behavioral economist and author of "Predictably Irrational," has some answers. One of the book’s chapters describes the difference between “money markets” and “social markets.”
Paying employees to lose weight is an example of a money market. When the money goes away, so does the exchange; this is exactly what studies have found when weight-loss incentives end.
A social market, on the other hand, offers only the satisfaction of achieving the goal. Research has shown that people typically work harder on a task when they were doing it for free than they did when they were paid, because volunteering triggers what social scientists call intrinsic motivation — or an internal pull to do something driven interest in or enjoyment of the task itself.
An employer would achieve longer-lasting results by tapping the employees’ intrinsic motivation for improving health to help carry them farther and maintain healthy choices longer.
Ariely is among other researchers working with employers to test ways of motivating employees to make healthy choices. Meanwhile, the Patient Protection and Affordable Care Act and many wellness vendors still are promoting money incentives. The health care reform law allows employers to reward healthy employees with up to a 30% discount on their health premiums. It also leaves open the possibility for the discount to rise to 50%.
Money incentives will likely become more and more common, despite evidence of their limited effect. The core premise makes logical sense to business people, and therefore it will continue.
When Ariely shares the results of his employer experiments, we may have new, innovative, and effective strategies to promote employee health. Until then, conventional wisdom will keep doing what makes sense, but doesn’t succeed.
Guest blogger Linda K. Riddell is a principal at Health Economy, LLC, where she works with clients on gaining practical tools to comply with health care reform, and to maximize the new opportunities that health reform offers. She can be contacted at LRiddell@HealthEconomy.net.
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23 Comment(s)
Posted by: Steven88 | April 25, 2012 11:01 AM
Thanks for such an interesting post here. I have never thought about trying to do something health related for money but I am sure that it would be really hard to do that. I can't actually explain why but it's always harder to make yourself do something for example lose your weight and so on. But that's an interesting idea for encouraging people for sure. Regards, Steven from anti wrinkle cream that works
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Posted by: WhyNobodyBelievestheNumbers | April 15, 2012 7:56 AM
Linda is right -- there are no studies that any incentives make any cost-effective difference.
Observations: (1) Joanne Ziegler's comment is quite consistent with this conclusion: yes, a few people change with incentives but you pay incentives on everyone just to get a few people to change and possibly avoid a bad health event. That's not cost-effective, period.
(2) It turns out most of the places that claim savings through wellness are provably and often humorously wrong. Like Lincoln Industries, which gets cited all the time and has won tons of awards. Turns out they were comparing their per-covered-person health benefits costs to "benchmarks" for per-covered-employee costs, and when you substitute the correct benchmark, as I did on my website, the health benefit spend is almost identical to the Nebraska average.
(3) My new book, the introduction of which can be downloaded free from my website, shows exactly the opposite: That employees will take a worse financial deal to work at a company with a strong wellness culture. This is exactly the opposite of paying people to be healthy.
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Posted by: james andy | February 13, 2012 12:10 AM
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Posted by: james andy | February 12, 2012 11:53 PM
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Posted by: Happiness1st | February 10, 2012 9:22 PM
(...continued) Imagine working in an environment where employees have learned happiness skills. How difficult would it be to leave such an environment for one where that training had not been provided?
We need intelligent leaders with creative solutions and high levels of emotional intelligence.
We need to retain our key employees. Turnover is one of the biggest risks during recovery.
We need competitive edges. Happiness is a huge competitive edge and it increases the chances of developing other creative and inspired competitive edges.
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Posted by: Happiness1st | February 10, 2012 9:19 PM
Ask an employee who went to a 'wellness event' how they felt at the end of the day, after being told all the things they do wrong.
Does your motivation go up when you are feeling down? That is not the norm.
When you are feeling good is when you want to do positive things like loose weight, exercise and stop smoking.
There is a solution. One that makes employees self-motivated and has more business benefits than I could post in the limited space here.
Happiness Training adds far more value to both the employee and the business and can accomplish everything they are attempting to accomplish with wellness programs and SO MUCH MORE!
Increased happiness has now been proven to have positive impacts on absenteeism, employee turnover, productivity, health care costs, intelligence, creativity, resilience, sales, and emotional intelligence. Basically, everything that corporations attempt to do with corporate wellness programs can be done (and much more) by teaching their employees how to be happier.
Scientists have shown that happiness can be learned through development of new skills.
The benefits of happiness are too great to list here. Here are some results of increased happiness:
- One company experienced a 1.5 day per month per employee reduction in absenteeism with 1,000 employees (18000 days a year equivalent). - Being happy vs. unhappy contributes more to longevity than smoking status! - Intelligence (IQ), creativity, emotional intelligence (EQ), and resilience all increase in tandem with increased happiness. - Even when they become sick, happy people recover faster and do not experience as many symptoms as an unhappier person with the same illness. - Even as happy people live longer, the debilitating diseases that disable arrive far closer to the time of death, thus alleviating years of dependency. - The higher level of emotional intelligence means less time dealing with petty grievances that steal valuable time. - Happy people see solutions more than problems. - All relationships tend to improve with increased happiness, so the impact at work from turmoil at home lessens. - Happiness has positive impacts on heart disease, high blood pressure, cancer, Alzheimer's, diabetes, depression, colds, flu, and many more common ailments.
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Posted by: Frank Hone | February 2, 2012 12:03 PM
The article and comments reflect the state of incentives in the health and well-being improvement space - there are conflicting opinions, but little hard data.
And in considering incentives for health behavior change it can be challenging to structure an experiment that yields relevant and measurable outcomes.
Cash can be effective in motivating a transaction behavior at a point in time - an event, but true behavior change - especially with weight loss - needs to come from within. The motivation to succeed does have to be intrinsic, and this where most incentive strategies fall short.
It is far more effective for companies to create a culture of well-being, have leadership commitment and effective communications - but that is a lot harder to do, so the tendency is to "pay for participation" and hope that the results are positive outcomes.
We are still at "Incentives 1.0" and have much work to do as an industry.
Frank Hone
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Posted by: Retail Exec | February 2, 2012 7:01 AM
There is a key difference. The study was based on a "one-time" incentive, where the most effective wellness programs have contribution incentives for the full year. Additionally, if the employee doesn't particpate, they will pay a higher percentage of the total cost of healthcare. Employees who fail to participate and continue to lead an unhealthy lifestyle should pay the maximum amount allowed for healthcare. Also, employers could even limit which plans non-participants are eligible to participant in.
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Posted by: GCP | February 1, 2012 1:31 PM
I'm wishing this article were a little more rounded with potential solutions. For example, my company provides incentives to employers and we focus heavily on health and wellness program customers. We have worked hard to shape and position the reward to have a positive effect on healthy behavior by offering "healthy gift cards", like CVS/pharmacy's Select card, which filters out non-healthy items (such as tobacco & alcohol) and ties the reward to healthy needs, like prescription co-pays, flu shots, cold and flu medications, etc. We also feel that gift card brands like Subway and Nutrisystem can reinforce making healthy choices...an employee could spend their cash reward on junk food or perhaps be inspired by their health and wellness program to eat a healthy lunch or participate in a healthy eating/weight loss program. There isn't much debate about the successfulness of incentives for health and wellness outcomes and program participation, but selecting the right incentive can send the right message and potentially change one's habits and long term behavior, that cash inherently won't change.
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Posted by: Richard C | February 1, 2012 2:07 AM
Can you provide the citation for the study at CMU
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Posted by: Greg J | January 31, 2012 10:09 AM
the headline doesn't seem to express the author's views, which have more to do with the merits of alternative incentives for long-term behavior change than an assertion that "paying employees to be health doesn't work".
Incentives are malleable things, highly dependent on the context in which they are implemented (among other things).
With respect to selecting and using 'better health behaviors' incentives, "Try something, measure, adjust, repeat" seems as reliable a heuristic as any other.
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Posted by: Doug3 | January 31, 2012 7:54 AM
That's a rather bold statement to say their are "no studies" demonstrating the impact financial incentives on health behaviors. My company has been offering incentives for over 4 years now and we have seen meaningful improvements which have been maintained. I have seen similar results with other companies who have multiple years of data. I believe incentives can't exist in vacuum though. They need to be combined with the right programs and support services as part of an overall strategy. The incentives get people's attention and drive a higher level of participation than you would ever see without them. Intrinsic motivation is important but often a kick in the behind is also needed.
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Posted by: Joanne Ziegler | January 30, 2012 6:58 PM
Changing the lives of even just a few employees by adding a cash incentive can positively impact a health plan, and a life. I've seen this work - been doing it for three years now.
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Posted by: Linda Riddell | January 30, 2012 4:40 PM
In response to S. Miller, there are no studies demonstrating that putting a surcharge (or discount) on the employee's premiums has any impact on their health behaviors. People simply adjust to paying their contribution toward their health premiums.
Cordially, Linda K. Riddell, MS
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Posted by: S Miller | January 30, 2012 3:44 PM
I am not sure that the long term behavior impact of a one time incentive to lose weight can be compared to the long term behavior impact of an annual employee contribution savings on their health plan. The contribution savings can be significant dollars and is re-inforced every year.
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Posted by: KenC | January 30, 2012 2:39 PM
Will be of interest to see the results from the new study, for a point of reference and comparison.
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Posted by: KenC | January 30, 2012 2:38 PM
Will be of interest to see the results from the new study, for a point of reference and comparison.
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Posted by: carolharnett | January 30, 2012 1:48 PM
Excellent points, Linda. Well-said.
Carol Harnett
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