Does Loss Aversion Beat Procrastination ?A Behavioral Health Intervention at the Gym

Financial incentives are a common tool to encourage overcoming self-control problems and developing beneficial habits. There are different means by which such incentives can be provided, yet, up to date there is little empirical evidence on the relative effectiveness of different incentive designs. In this paper, we conduct a field experiment to explore whether and how incentives that are economically equivalent but framed differently affect the likelihood of exercising at a gym. We find that framing incentives in terms of losses, meaning individuals lose cash incentives by not exercising, encourages more frequent visits to the gym than framing incentives in terms of financial gains. After removing these incentives, we observe habit formation in gym exercise only if incentives were framed as losses rather than gains. The findings are consistent with the concept of loss aversion and suggest that cost reductions and performance improvements can be achieved if opting to frame incentives in terms of losses.