Many people struggle with making lifestyle changes that don’t deliver immediate and tangible rewards. For example, large sections of the population found it hard to observe social-distancing guidelines designed to slow the spread of COVID-19. Policy makers and health-care leaders similarly struggle with devising incentive schemes that are effective in the face of people’s impatience.
Offering incentive payments can help with compliance, according to Indian School of Business’s Shilpa Aggarwal, Chicago Booth’s Rebecca Dizon-Ross, and University of California at Berkeley’s Ariel Zucker.
Their study involved motivating people to walk daily to help manage diabetes, a disease that consumes almost 1 percent of global GDP. The tab is 4.5 percent of GDP in India, where Aggarwal, Dizon-Ross, and Zucker conducted their research.
The researchers selected close to 3,200 diabetic and prediabetic patients from the Indian city of Coimbatore and set out to promote a daily walking target of at least 10,000 steps. During a screening, participants filled out a survey to assess their level of impatience, responding to statements such as “I’m always saying: I’ll do it tomorrow” and “I usually accomplish all the things I plan to do in a day.”
One group of participants, randomly chosen, received a Fitbit electronic health tracker and a reward worth 10–20 rupees (US$0.14–$0.27) per day for compliance.
The participants in this group—unlike the other participants, who received no rewards—were assigned one of two kinds of incentive contracts. Either they earned a reward for each day they met their target goal, or they were rewarded only if they met their goal at least four or five times in a week. Everyone had the same daily payment amounts, but the latter “time-bundled” contract only paid out if participants cleared a threshold. Someone who walked three days rather than the four or five required wouldn’t receive anything.
Liking an item more makes people more willing to wait for it.
When People Are Willing to WaitOffering a reward had a significant effect, the researchers find. People who received payments met their target more often and boosted their number of daily steps by 1,266—equal to 13 minutes of brisk walking. This held true throughout the three months of the trial and had quantifiable effects on participants’ physical and mental well-being as measured before, during, and after the study.
But the researchers also find that time-bundled contracts were especially effective with participants who were impatient to see the results of their effort—plus it achieved the results for 10–15 percent less in costs compared with the other payment model.
The results suggest that offering such all-or-nothing incentives could help encourage people to make healthy choices and participate in vital social programs, and may be particularly effective with people who are impatient to see what their effort will yield.
Shilpa Aggarwal, Rebecca Dizon-Ross, and Ariel Zucker, “Incentivizing Behavioral Change: The Role of Time Preferences,” Working paper, December 2020.
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