Gianluca Buonanno is the slightly overweight mayor of the town of Varallo, which is situated in the pastoral foothills of the Italian Alps. Buonanno says he could stand to lose about 13 pounds and, in his estimation, so could many of his neighbors. And so, not long ago, Buonanno made an official proclamation in which he promised to pay his fellow townspeople cash to slim down. Townsmen would receive 50 euros (about $74) if they lost 9 pounds in a month; townswomen would get that same amount for shedding 7 pounds. What's more, if participants managed to keep the weight off for five solid months, they each stood to gain an additional 200 euros ($295). "Lots of people are saying, 'I really need to lose some weight but it's really tough,' " explained Buonanno. "So I thought, why don't we go on a group diet?"
Before you write this off as a stunt, consider the possibility that Mayor Buonanno has stumbled on a way to save billions of dollars in health-care costs and throw a lifeline to millions of overweight Americans. The increasingly dire numbers are familiar: Currently, roughly 65 percent of Americans are either overweight or obese, which is an increase from 56 percent in 1994 and 46 percent in 1980. People who are obese or overweight often suffer from a range of medical problems. According to a study in Health Affairs, the average annual cost of treating an obese person is $1,244 more than the cost of treating a healthy-weighing person. Obesity also leads to more lost work time . The typical American company with 1,000 employees pays a total of $277,000 per year for the medical expenditures and absenteeism caused by obesity.
Could the answer to this problem really be paying people to eat less and exercise more? According to Dr. Eric Finkelstein, author of the forthcoming book The Fattening of America, the answer is most definitely yes. This fall, Finkelstein published a study involving 207 overweight or obese people who wanted to lose weight. They were randomly broken into three groups. One group was offered $14 for every 1 percent reduction in body weight over the course of three months; another group was offered just $7; and a control group nothing at all. On average, members of the $14 group lost 5 pounds, members of the $7 group lost 3 pounds, and members of the control group lost just 2. Finkelstein says that the most persuasive data concerned the participants who shed 5 percent of their body weight, which is generally considered to be the threshold for real health benefits. The members of the $14 group were four times more likely to hit this marker than the control group. The beauty of this, insists Finkelstein, is that it is so cost-effective for insurers or employers. "If people aren't losing weight and hitting their targets, then you're not paying," he says. "You are only paying for success."
In truth, the results of Finkelstein's study aren't entirely surprising. Incentives of this kind can be quite effective. (Check out this defense of giving students cell phones as an incentive to do well in school.) A number of studies have shown that financial incentives, when they are directly linked to the achievement of goals, can be remarkably effective in getting people to change their behavior—even when potent addictions are involved. One of these studies, conducted by professor Stephen Higgins, director of the Substance Abuse Treatment Center at the University of Vermont, was designed to get pregnant women to quit smoking. There were two test groups, and the women in both received a weekly stipend and a number of pamphlets outlining the dangers that smoking posed.
There was one crucial difference. The women in the first group were rewarded on a pay scale so that, for each week they abstained from smoking, they were given a raise. If their urine tests indicated a relapse, they were knocked back to the bottom of the pay scale. Meanwhile, the women in the second group were paid a flat rate regardless of whether or not they abstained. On average, the women in both groups ended up earning roughly the same amount—$300 to $400 worth of vouchers—but the behavioral outcomes were quite different. The women in the first group were almost five times more likely to quit smoking.