This paper provides comprehensive evidence for the usefulness of financial incentives to encourage obese people to reduce body weight. The analysis has improved upon the existing literature by conducting a large randomized experiment, distinguishing between two different premium levels as well as gender, and accounting for non-random sample attrition. The results are highly relevant for both employers and health insurance companies that search for effective measures to reduce obesity among their employees or their insured. Financial incentives for weight loss could be easily integrated in existing bonus programs for healthy behavior, disease management programs, and other health promotion programs.
We find that a reward of e 150 [€] doubles the success in reducing body weight. The control group who did not receive a reward for achieving an individual-specific weight-loss target of between 6 and 8 percent of initial body weight within four months has lost, on average, 2.4 percent. Patients who were rewarded by up to e 150 lost about 5 percent. The causal effect of the reward amounts to 2.6 percentage points, with the estimate being insensitive with respect to attrition. The size of the effect is in line with most recent medical trials on this topic, even though these are not able to rule out the possibility of biased estimates of the treatment effect due to non-random sample attrition.[It does not seem like a large effect (?) . . . ]
That is from the new working paper "Does Money Burn Fat? Evidence from a Randomized Experiment" by Augurzky et al (September 2012).
A graph from the paper: