Ian Ayres and Barry Nalebuff write:
Imagine a Commitment Store that offered a financial incentive to lose weight. You promise to lose a pound a week for the next 20 weeks and then keep the 20 pounds off for the remainder of the year. You back up the promise with a $1,000 weight-loss bond. Weigh-ins are biweekly. Every time you meet your goal, you get back $60. Over the course of the year you could earn back $1,560. Of course, each time you miss, that costs you $60.
Here’s a diet system that literally pays you to lose the weight. If you miss your goal weight one week, you still have an incentive to get back on track to collect the next payout. If $60 a weigh-in isn’t enough to get your attention, then buy two or more bonds….
The stick is mightier than the carrot. People hate losing their own money even more than they love gaining a windfall of the same amount. Psychologists call this phenomenon loss aversion. The great thing about the weight-loss bonds is that the overweight investors have put their own skin in the game.
I read this story this morning and then went for a walk in my neighborhood. As I always do, I noticed many people whom I would term “conspicuous exercisers.” For instance, their shoes are quite new, they run routes with lots of public traffic, and so on. While one explanation for conspicuous exercising is vanity, another might be precommitment. I mean, if you buy a fancy outfit and jog publicly, people might notice you. Then, if you quit, you’ll feel shame.
This is part of the reason, I think, that people sign up for 10Ks and marathons and century road rides (100 mile non-races). You could, say, train for a 26 mile run and then, one day, just do it. Or you could commit yourself to a marathon and then start to train. The latter is more of a precommitment. Usually, from my experience, folks that sign up for a long race tell their friends about it. Again, I think this is probably a function of, among other things, precommitment rather than status signaling, though it’s easy to confuse them.