Axiomatic foundations of expected utility theory; (b)Non EX. theories: basic models Applications: (a) Consumption CAMP; (b) Inequality indices and income distribution 4. Topics in applied microeconomics 5. General Equilibrium Theory:….
What is Microeconomics
In Incentives, Commitments, and Habit Formation in Exercise: Evidence from a Field Experiment with Workers at a Fortune-500 Company study a wellness incentive program implemented at a large corporate headquarters office. Three groups of employees were given different types of financial incentives to visit the on-site fitness center, and their gym-going behavior was monitored for many months afterward.
The incentives were that a set of employees received $10 per gym visit over 1 month. After the month was over then they were offered a 2 month contract to continue going with a little bit of a twist, to see the effect of it.
How does a commitment contract work? The employee puts down a certain amount of money, they get to choose the amount. If they don’t stick to their commitment, they lose the money. They need to be able to go to the gym every 2 weeks over the next 2 months. It is all about risk vs commitment. How much do you really want this, do you want to see personal growth in yourself, are you doing it just so you don’t lose the money, it is all in your hands the way you decide to play it.
Why would anyone want to take up this offer, the best possible result is breaking even? This was made to differentiate between your long-term preferences vs the short-term preferences. You may set a schedule saying I’m going Monday and Friday every week. You go Monday and you feel great after going and are excited to continue on Friday.
You make it to Friday and you make plans with your friends instead of having your gym time. It was a long week so you want to have a good time. You should be able to reward yourself after a long week but do you think that you would feel even better and have a better time out if you went to the gym beforehand.
With having this contract, say you know you haven’t been to the gym in 13 days and you need to go tomorrow or you lose your money. That might push people to get to the gym, not just for the money but that specific trip could make them want to keep going back in the long run.
So the best-case scenario for a commitment contract is not just breaking even: its changing behavior in a positive way. About 1 out of every 8 employees offered a chance to create a commitment contract decided to do it (Royer, Stehr, & Sydnor, 2015).
Below are the results of the commitment contract subjects. It was shown that there was a spark in the gym visits more for the group who signed the contracts than when they were offered the $10 per visit. With the contract you are putting your own money on the line. You have something to lose if you don’t hold up your end of the bargain. In the long run it is not about the money, it is about your lifestyle and goals.
You have things you want to achieve and sometimes you just need a little nudge to get you going. After the 2 month commitment ended, it was wanted to be known the long term effects of the subjects. It was shown that they had noticeably more frequent gym visits on average.
Does linking incentives to fitness really help you get to the gym more?
Why is it that after the free trial period ends that most of the memberships decline? Why do people not continue on? See no results? Have no incentives?
Commitment devices (Fitbit/ Apple Watch) may be the best way to achieve long-term changes New Year’s resolutions for most seem to be about Eating healthier, go to the gym more, and cut out sugar, most of health/Fitness related. Get statistics on the New Year’s resolutions. How may are making this there resolution and how many actually keep this resolution. 45% of people said that there 2018 resolution was to lose weight/get in shape Fitbit (27.4 million users) and My Fitness Pal (19.1 million users) are 2 of the most used fitness trackers in 2018 Only 8% of people keep their resolutions.
People tend to over set goals. When they are too big to reach, you tend to fail. You also don’t want to under set your goals because you may be able to reach them too easily and not get the results out of them that you had really hoped.
If you fail at your goal, that doesn’t mean you should give up. You just have to reevaluate the goal. You want to get back out there achieve your goals. Ex. You said you wanted to go to the gym 4 days a week, but that was too much with your schedule, you shouldn’t quit all together just go 2 days a week instead.
Everything is in the incentives, put it all out there.
Supply describes the total amount of a specific good or service that is available to consumers
(Something needed or wanted) available to someone. (Market driven)
People want a membership, they want to achieve their fitness goals, and they want to be a better version of themselves
Demand consumer’s desire and willingness to pay a price for a specific good or service.
Cost of membership may increase as more member sign up
In the study- they had to put up their own money, they were able to risk for their goals
Cost – (of an object or an action) require the payment of (a specified sum of money) before it can be acquired or done.
The money they had to put up, their time, their energy, their commitment
Benefit -an advantage or profit gained from something.
Better body, feel good about themselves, achieved goals
Reading articles, writing this essay has got me thinking about my fitness goals and lifestyle. I own a Fitbit and I do enjoy it but I need to get back to using it for all of its features and feeling proud of what I have accomplished in a day. You need to be persistent and have goals. You can’t just decide one day to start working out.
You need a plan and be physically and mentally ready to conquer the task you set up for yourself. You need an incentive first, that is what gets your foot in the door, and then you continue going because you want to better yourself. Once you start the drive to better body helps keep going back.