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Entrepreneurship: Making Money On The Obese

I’m currently reading economist Tyler Cowen’s book, Discover Your Inner Economist, and the first chapter deals with the effectiveness of monetary incentives. Money, he argues, isn’t always a useful tool in altering human behavior; anyone who’s offered financial rewards to their children for doing chores can tell you that the results are mixed.

I’m currently reading economist Tyler Cowen’s book, Discover Your Inner Economist, and the first chapter deals with the effectiveness of monetary incentives. Money, he argues, isn’t always a useful tool in altering human behavior; anyone who’s offered financial rewards to their children for doing chores can tell you that the results are mixed. In passing, he mentions another “bad” use of monetary incentives: paying people to lose weight.

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But new research is suggesting that you can indeed use monetary incentives to get people to drop fat. As Fox News reports:

The research published in the September issue of the Journal of Occupational and Environmental Medicine found that cash incentives can be a success even when the payout is as little as $7 for dropping just a few pounds in three months.

Losing weight is a highly personal, sometimes embarrassing endeavor; to go on a diet is to admit implicitly to your peers that you’re not happy with your body. That kind of vulnerability isn’t easily allayed, but money can apparently help. So, the question is: does anyone dare make a buck off the obese?

In his book, Cowen discusses the possibility of an entrepreneur starting a Website for people who want to lose weight. Customers can pledge a certain amount of money — say, $200 — that they’ll lose a target amount of weight. If they don’t provide proof they’ve lost the weight by their self-imposed deadline, the site keeps the money. Cowen notes that this would never work; customers would develop a negative relationship to the whole schema of weight-loss if it involved punishment. But the recent study quoted above takes a reward approach, and opens the doors for a number of potentially profitable (and ethically questionable) mechanisms for altering human behavior.

In the study, which was conducted at the University of North Carolina in Chapel Hill, participants were allowed to form “teams” to support each other in their weight-loss attempts, and were paid a pro-rated amount depending on how much weight they lost. So what if Cowen’s model were modified; instead of a simple lose-or-win model, the customer’s contribution becomes an investment. Weight loss aspirants could contribute the same $200 with the possibility of getting back $250 or $300, depending on their level of weight loss. Presumably, most customers would not meet their goals; weight loss is hard, and setting a realistic deadline is harder. Based on this assumption, a given company could promise higher returns to successful aspirants without the fear of running in the red.

This sort of self-based gambling could be useful with enforcing all kinds of behavior changes: quitting smoking, driving less, reading more. Granted, all the behavior changes have to be easily proven, but time-stamped photographs or short-answer questions could be enough to verify the veracity of customers’ progress.

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Of course, there’s an ethical gray area when it comes to making a profit on people’s negative self image. Doubtless, many customers would lose money by setting unattainable poundage goals or deadlines; in that case, the loss of their pledged amount just serves to add insult to the injury of their failure to change themselves, and might encourage future failure. To boot, it encourages aspirants to keep their quest between themselves and their savings account, instead of turning to friends and family for support and encouragement. I’m also uncomfortable with the suggestion (which is tacit in the study) that people’s financial well-being is more important than their corporal well-being. According to the findings, people were willing to lose 5% of their body weight for only $14. That either makes weight loss seem surprisingly easy, or $14 seem surprisingly valuable.

So the question is, will any entrepreneurs be savvy (or sick) enough to give incentivized behavior modification a shot? Would it actually work, as the UNC study suggests, or achieve mediocrity (or failure), as Cowen predicts?

About the author

I've written about innovation, design, and technology for Fast Company since 2007. I was the co-founding editor of FastCoLabs.

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