Employing behavioral economics in structuring financially incentivized exercise programs

The Foundation's initiative, Applying Behavioral Economics to Perplexing Problems in Health and Health care, was designed to: (1) apply the principles and frameworks of behavioral economics to uncover pioneering solutions to persistent and perplexing health and health care problems and (2) discover and test interventions that have breakthrough potential to transform the way health care is delivered and health is promoted and preserved.This randomized field experiment will compare the effects of declining versus constant incentives for exercise. Due to spiraling health care costs, insurance companies and employers are increasingly using financial incentives to promote healthy behaviors, such as regular exercise. This experiment will include three types of incentives which will provide important estimates for corporations in designing exercise incentives: (1) a high constant incentive, (2) a low constant incentive, and (3) a high declining incentive. Incentive programs are typically structured with constant incentives, which do not change over time. However, the constant structure may not use limited resources efficiently. In particular, economic models of habit formation suggest that incentives that start higher and decline over time (high declining incentives) could be more effective. If declining incentives improve performance, that would offer the possibility of fundamentally improving exercise programs at no additional cost. The investigators will present results of this experiment at conferences, such as the American Society of Health Economists, Behavioral Economics Annual Meeting, and National Bureau of Economic Research's Summer Institute, as well as at academic seminars, and in the National Bureau of Economic Research's working paper series. The grantee will create a news release on the findings.

Grant Details

Amount Awarded $100,000.00

Awarded on: 3/15/2012

Time frame: 4/1/2012 - 1/31/2014

Grant Number: 69923


University of Wisconsin-Madison Research and Sponsored Programs

21 North Park Street, Suite 6401
Madison, 53715-1215


Heather Royer
Project Director


Justin Sydnor
Project Director