Companies can help employees to lose weight (hint: it involves cash)

Companies can help employees to lose weight (hint: it involves cash)

It’s not about the size of the reward

Do you want to encourage your employees to get healthier and lose weight?

Try offering them cash prizes for taking part in a wellness program, with a combination of small and bigger awards.

So say researchers at the University of Pennsylvania, who found that the right kind of “lottery” boosted long-term participation in a wellness program by nearly 50% over alternatives.

Lead researcher Mitesh Patel points out the findings may be particularly useful because at this point 70% of adult Americans are either overweight or obese, and a remarkable 85% of employers offer some kind of financial incentives to employees to take part in wellness programs.

Penn conducted a controlled, six-month study involving 209 university employees. Researchers wanted to see how best to encourage adults to take a healthy 7,000 steps a day.

Bottom line? They found a big impact when they offered a combination of $1 and $50 cash prizes. Those offered an 18% daily chance of winning $1, and a 1% chance of winning $50, hit their goals 38% of the time.

If that doesn’t sound very high, consider the alternatives. Those offered no incentives, or more simplistic lotteries, hit their goals only 26% of the time.

Offering rare jackpot prizes — a one in 400 chance of winning $500 each day — ended up being counterproductive. Employees eagerly participated at the start. Then, after failing to win the prize for a while, they dropped out. Participation rates ended up lower at the end than offering no prizes at all.

Why did only the combination lottery work so well? Patel says successful lotteries — such as those run by the states for big money — give you two ways to win.

“When you buy a lottery ticket,” he said in an interview at Wharton, “there’s a $500 million jackpot lottery. But that’s not the only thing, right? If you match two or three numbers, you might win $20 or $100. The method there is to keep you engaged. You know that you’re going to win something. The combined lottery really leverages that. You win something small, which kind of keeps support, but then you have that large jackpot in front of you. It’s a balancing of the two different mechanisms.”

Patel is a professor at Penn’s Wharton business school and the Perelman School of Medicine. He runs the Penn Medicine Nudge Unit, which explores how to apply behavioral techniques to the health system.

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