Does Money Burn Fat?

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:

Financial and non-financial incentives to improve students' performance

A new paper by Levitt et. al. (June 2012) explores the effect of financial and non-financial incentives on the performance of high-school students in standardized tests. They find the usual - that incentives matter, and that "incentives framed as losses have more robust effects than comparable incentives framed as gains." 

Two findings stand out:

1) "Rewards provided with a delay have little impact on student performance." And, 

2) "The introduction of rewards does not crowd-out future effort."

The title of the paper is "The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance."

May be grades were not good enough incentives after all? But something does not sound right about coming to class with awards, chocolates, trophies, and money. In the longer run, once in a new equilibrium, will larger incentives be necessary? Where will this stop?  

Will there be blood - at the margin?

We have presented evidence that incentives offered at blood drives significantly increase the number of donors presenting and units of blood collected, and do not increase the proportion of deferrals. We also found that, when incentives are offered at a given drive, turnout is significantly reduced at (geographically and temporally) neighboring drives, especially when these drives do not offer incentives. This indicates that some donors switch the timing and location of their donations to take advantage of material incentives. Ignoring displacement effects could thus lead to a substantial over-estimate of the total effect of incentives depending on the presence of neighboring drives and whether they offer incentives.

That is from the conslusion of the paper "Will There Be Blood? Incentives and Displacement Effects in Pro-Social Behavior" by Lacetera, Macis, and Slonim (American Economic Journal: Economic Policy, February 2012). An early draft is here (March 2011).The abstract:

We present evidence from nearly 14,000 American Red Cross blood drives and from a natural field experiment showing that economic incentives have a positive effect on blood donations without increasing the fraction of donors who are ineligible to donate. The effect increases with the incentive’s economic value. However, a substantial proportion of the increase in donations is explained by donors leaving neighboring drives without incentives to attend drives with incentives; this displacement also increases with the economic value of the incentive. We conclude that extrinsic incentives stimulate pro-social behavior, but unless displacement effects are considered, the effect may be overestimated.

Incentives and teaching effectiveness

“The most important role for incentives is in shaping who enters the teaching profession and who stays,” said Eric A. Hanushek, a professor of economics at the Hoover Institution at Stanford University. “Washington’s incentive system will attract talented teachers, and it’ll help keep the best ones.”

That is from this NYT article. Monetary incentives for teachers can spur innovation by improving education (this is the argument in Tabarrok's new book).  

Incentives and the timing of births

In this paper we study the fertility effects, as well as the potential health consequences for both mother and newborn child, following the announcement of the abolition of the Austrian baby bonus as of January 1, 1997. The Austrian baby bonus amounted to a maximum of 1,090 Euros per child in 1996, the year before the abolition, and was paid conditional on medical examinations of both mother and newborn child. The unique feature of this policy change is that the elimination of the benefit was announced about ten months prior to enactment, creating the potential for an “abolition effect” because prospective parents had both an incen- tive and the opportunity to move their baby plans forward. 

. . . we find that about 8% (roughly 600) more babies were born in the month before the abolition, relative to the number of children that would have been expected in the absence of the policy change, as a consequence of the public announcement. 

That is from the new paper "Financial Incentives, the Timing of Births, Birth Complications, and Newborns’ Health: Evidence from the Abolition of Austria’s Baby Bonus" by Brunner and Kuhn.