Time to hustle. Researchers have found that putting financial incentives at risk can increase physical activity among employees who take part in fitness programs. A study tested the effectiveness of three money-based employee rewards and found - despite having the same amount - each can trigger a different outcome.

Lead author Dr. Mitesh S. Patel said over 50 percent of American adults don't get enough exercise despite knowing it's good for the health. Companies are doling out wellness programs for their employees to increase their levels of physical fitness. However, businesses need to understand how to effectively fuse the fitness programs with incentives.

"Our findings suggest that these programs could result in better outcomes if they designed financial incentives based on principles from behavioral economics such as loss aversion," said Patel who is a Medicine and Health Care Management assistant professor at The Wharton School and Penn's Perelman School of Medicine. He is also a Crescenz VA Medical Center physician.

The study enrolled 281 participants and gave them a fitness goal. Each participant needed to reach 7,000 steps daily in the span of 26 weeks. Through a random selection, they were divided into four groups for the first 13 weeks and given varying incentives for reaching the daily goal.

  • Control Group - given no financial reward
  • Gain Incentive Group - given $1.40 daily ($42 monthly)
  • Lottery Incentive Group - given the chance to win a daily lottery worth $1.40 per day
  • Loss Incentive Group - participants were given $42 monthly but they lose $1.40 for each day they fail to reach to goal.

In the last 13 weeks, all the groups received no financial incentive but continued to get performance feedback. The study used a mobile app on the participants' smartphones to track the daily progress.

After 13 weeks, findings showed that the daily rewards and lottery groups did not do any better compared to the control group. In these three groups, the participants were only able to meet the daily goal about 30 to 35 percent of the time.

Participants who risked losing the money that they have already gained met the daily goal 45 percent of the time, which is nearly 50 percent higher than the control group. Findings showed that despite having the same amount, effectively framing the financial rewards can increase the program's chances for success. The study was published in the journal Annals of Internal Medicine on Feb. 16.

"According to a few seminal behavioral economics experiments, people don't like losing something twice as much as they like gaining the same thing, as a rule of thumb," said University of Toronto's Marc Mitchell who wasn't involved in the study.

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