Would you take diet advice from an economist? After reading an article by economist Richard B. McKenzie in today’s Wall Street Journal, I think you should. And this advice is not only about losing weight–you could apply it to anything you have been putting off or when you hit a wall in reaching a goal.
Richard McKenzie found himself trying to lose the same nine pounds for the better part of 10 years. So he took the advice of economist Tyler Cowen and created the “Economist Weight-Loss Incentive Plan.” Under this plan, he signed a contract with a friend stating that he would lose the nine pounds in 10 weeks or else he would pay her $500. The idea was to choose an amount of money that would hurt a bit to lose, but would not be more than he could stand to lose.
Even though McKenzie is an economist and understands how cost influences our decisions, he was surprised at how much the potential $500 payment affected his behavior. He joined a gym, took longer walks, ate more salads and skipped the fast food. At the end of the ten weeks, he had lost 14 pounds, surpassing his goal.
We all weigh the relative costs and benefits when making choices, whether those choices are about what to eat, whether to see the movie as soon as it is released or wait for the DVD, changing jobs, or any of the dozens of tiny choices we make every day.
If you need to motivate yourself to make a change, why not try your own version of this system? Make a contract with someone that you will pay them a sum of money if you have not reached your goal by a specified date. It does not have to $500. Make it $100 or $1000, whatever figure will motivate you to reach your goal.
What if someone is willing to pay you? Perhaps a parent offers to give you $500 if you reach your goal. That might work, but people are generally more motivated by the possibility of loss than gain. Besides, agreeing to pay someone else if you do not reach your goal means that reaching your goal costs no one. Cost is only incurred if you not do what you said you would do.
Put the contract in writing, and both you and your friend should sign it. They are agreeing to hold you accountable. Set a specific goal. Saying that you will “get organized” over the next 12 weeks is too vague. What does that mean? McKenzie’s goal worked because there was no question about whether or not he met it: he contracted to lose nine pounds in 10 weeks.
Then watch how the financial incentive inspires you to stay on track and reach your goal.
[tags]weight loss, motivation, goals, goal setting[/tags]
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3 responses so far ↓
1 Helen Hoefele // Jan 9, 2008 at 8:56 pm
Your post reminds me of a recent New York Times article (via Freakonomics), entitled “The Stomach-Surgery Conundrum” (11/18/07) which highlights one of the more drastic methods people use to lose weight. I only mention it here since, similar to the article you reference, this article also points out how economists refer to these various weight loss methods as “commitment devices”, too.
Both articles point out that there is no need to do something drastic or expensive when something simple can be equally or even more effective. I really like how the contract idea that you refer to is scalable to income level, too.
I never realized that economists would be contributing such intriguing discussion points to the obesity debate.
Applying the contract concept to other areas is a great suggestion, too. Thanks for pointing this out!
2 Cathy Stucker // Jan 10, 2008 at 10:34 am
Economics affects every area of our lives, and I liked the application McKenzie made in the WSJ article. The connection you made is exactly right.
Making a big investment in something can sometimes be motivating (“I spent all this money, now I have to do this.”) but not always. I think one reason the contract works well is the ego factor–you do not want your friend to see you fail.
3 Clerical Business Solutions // Jan 11, 2008 at 10:34 am
The contract idea is really good & it could help motivate many people to do things that they have been putting off or keep them on track.
knowing the cost of something & what you are about to give up,if you don’t follow through, sometimes cost can really influence your decisions & this idea can be applied to so many areas.
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