Gain-Loss Incentives and Physical Activity: The Role of Choice and Wearable Health Tools

Abstract

Economic incentives are a promising approach for improving health behavior but have been limited by their short-lived benefits. In this manuscript, we examine whether coupling economic incentives with motivational tools provided by health wearables can address this limitation and drive longer-term changes in health behavior. We focus on “gain-loss” incentive schemes that offer both an economic reward for goal attainment and a penalty for failure to meet a goal. In an experiment conducted on individuals wearing Fitbit wearables, we find that gain-loss incentives can drive increases in physical activity but are limited by the element of choice. Specifically, we find modest and short-lived increases in physical activity for those provided the choice of gain-loss incentives. The subpar benefits for this group seem to emerge because those who benefit most from these schemes do not opt into them when they are voluntary. In contrast, we find significant and persistent increases in physical activity for those assigned (oftentimes against their preference) to the same gain-loss incentives. These individuals recorded ∼2,000 additional steps daily during the incentive period, and benefits persisted for six months after incentives ended. Critically, the persistent gains to this group were driven by individuals who also utilized the wearable’s goal-setting tool. Our results suggest that a novel approach toward motivating sustained changes in health behavior couples aggressive incentive schemes that jolt individuals out of their comfort zone in the short term with motivational tools built into health wearables that help individuals sustain healthy behavior after economic incentives end. This paper was accepted by Kartik Hosanagar, information systems.