Financial Incentives Encourage New Year's Weight-Loss Resolutions

Jan. 1, 2013 — -- Money might not be the ultimate motivator for everyone, but many people are turning to financial incentives in pursuit of weight loss or healthy lifestyles.

Company office pools or groups of friends encourage competitions to see who loses the most weight or body fat. The winner can win a pot of money or personal glory.

Now, with smart phones, an increasing number of websites and apps challenge users to set weight-loss gaols or to compete with friends or strangers using monetary rewards and punishments.

Read more: 5 Apps to Help Keep Your New Year's Resolutions

Yale economics professor Dean Karlan launched in 2007 StickK.com, a website through which users sign contracts to reach personal goals. The goals can include losing weight, quitting alcohol and getting out of debt. Users choose how much money to put on the line and where they want it to go if they don't reach their goal, such as to a friend or a charity.

Read more: Top 7 Financial Resolutions for 2013

Not to be outdone, two Harvard classmates launched GymPact a year ago. It was a free iPhone check-in app that rewards people for going to the gym, started by Yifan Zhang and Geoff Oberhofer.

Now GymPact, based in San Francisco with five employees, has launched an Android app today and boasts that it has motivated more than 750,000 workouts in 2012. Over 100,000 people signed up for GymPact in 2012.

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The premise allows those who go to the gym, according to their "pact," to never pay money, which can be anything from one to seven days a week. You provide your credit card information and pay an amount of your choosing if you do not adhere to the pact. The money from those who fail to meet their pact goal is pooled to those who do. A user's payout depends on what the people who failed to meet their goals put at stake and can often be a couple dollars a week.

The minimum payment per day for a missed gym outing is $5. For higher stakes, you can choose from $10 to $50 in $10 increments.

GymPact makes profits by taking a cut when money is paid.

"For me, what has been so surprising is that GymPact works best for users who are least active to start," Zhang said.

From 20 weeks before a user signed up for GymPact to six weeks afterwards, she said there was a 64 percent increase in user activity with the app. There was a 520 percent increase in acitivity for the least active users, or those who exercised less than 1 day per week previously.

The company has more than 40,000 gyms in a database to which users can add, with the exception of a home or office gym. Users check in on their smartphone apps.

GymPact also partnered with RunKeeper, another free app that keeps track of outdoor activities such running or cycling, and allows those activities to count toward a pact.

The company says its users reach 82 percent of the workouts to which they commit, with the average users committing $5 to $10 per day.

But financial incentives might not create long-term health habits.

A study by Carnegie Mellon University published in 2011 showed that financial incentives helped a group of veterans lose more weight compared with those who did not have monetary motivation.

But many of those participants who lost the weight regained it after the 32-week experiment.