Discussing the need for commitments devices
seem quite an odd thing, why should we deliberately choose to reduce our
options and freedom in the future to maintain our will? Why do we need to do
such thing?
For a good reason Ulysses (Homer’s hero)
asked for his crew to tie him to the mast.
No sailor could resist the song of the
Sirens. And Ulysses, knowing his weakness, came with a well-structured plan: no
one in his crew will listen to it, so they must fill their ears with wax, but
previously they have to bind him with strong ropes to the must, so he himself could
not follow his urge to send the ship to the rocks.
Two quite different strategies: for his
crew, removing the dangerous stimulus, for himself reducing his alternatives,
making a “commitment device”.
In this passage of the Odyssey, Homer captured
the conflict that humans experience while controlling their willpower, although
we know what it is best for us, we may be involved in situations that do not
allow us to act in our own benefit. So, sometimes, commitment devices are
necessary.
In this essay, I will discuss briefly why
we experience problems in controlling our will-power with particular reference
to exercise. In this context, I will review the role of commitment and
commitment devices, providing a brief discussion of how incentives interact in
their definition. Finally, I will present some elements that may help improving
the effectiveness of gym memberships as commitment devices.
In 2006 Stefano Dellavigna and Ulrike
Malmendier, found some intriguing evidence in relation to gym attendance and contracts:
“members who choose a contract with a flat monthly fee of over $70 attend on
average 4.3 times per month. They pay a price per expected visit of more than
$17, even though they could pay $10 per visit using a 10-visit pass.” (DellaVigna
& Malmendier, 2006). Such
behaviour, implied an extra six hundred dollars cost in their membership. Dellavigna
and Malmendier attribute that conduct to an overestimation of own ability to
control themselves in the future.
However, paying for a membership to a gym may
also be a way to “self-impose” a desire behaviour. It may be the case that some
of those who regularly go the gym and pay for a membership, feel pressed to do
so because of the sense of loss that comes for paying for something and not
using it.
In fact, some people do declare that they buy
a membership to help them with their problem of self-control in relation to
exercise. Gourville and Soman found evidence in data coming from a health club in
USA where gym attendance increased when club members received the bill of their
payment. (Gourville & Soman, 2002) Although the club members were committed for an annual membership, those
with payments in a quarterly base, experienced more peaks of attendance in a year
than those in an yearly plan. The payment of the membership had an effect on
gym attendance, but it dilutes over time. Gourville and Soman called this
effect “payment depreciation”. (Gourville & Soman, 1998)
Despite the easily available evidence of
people experimenting self-control problems that derail their original plans, a
more careful look should be taken.
In fact, people may change their mind, or
may experience changes in their life that impact on their preferences or
possibilities. In the well known “Marshmallow test”, performed by Walter
Mischel, kids experienced difficulties when asked to delay a reward (a marshmallow)
in order to double it. Studies done in continuation of its findings, brought
evidence that kids choices were mediated by “environmental reliability”
suggesting that their lack of self-control may be a rational answer to uncertainty.
Preference reversals are captured by
different kind of models and not all of them allow for a preference for commitment.
Some of them relate this time inconsistency with subject’s long-term
preferences.(Karlan, Ashaf, & Yin, 2006) In this sense, gym memberships, may not necessarily be related to
commitment devices.
However, in some cases commitments, as
decision aid mechanisms, are a preferred way to fight with problems in
controlling will-power. Steven Levitt defined commitment devices as “a means with which to lock yourself into a
course of action that you might not otherwise choose but that produces a
desired result”. In that sense, different degrees of commitment devices may
be distinguished. On one side, soft commitments discourage choices by means of incentives.
Individuals do not restrict their ability to choose different, but set strong
incentives to lean their decision to the intended side. On the other side,
there are hard commitments in which options are simply removed out from the
choice menu, making impossible for the individual to select them.
Is it a hard commitment better than a soft
commitment? There is no general answer to that question. A soft commitment may
be easily override, but preserves liberty and flexibility thus reducing the
chance of regret regarding the commitment device. Hard commitments reflect a
higher degree of compromise with the “correct” decision, but it may be the case
that by being so hard it end pushing us out of the system. Uncertainty surrounding
the situation should be carefully evaluated in advance of designing the
commitment device.
A nice example of a soft commitment device was
tested by Milkman, Minson an Volp (Milkman, Minson, & Volpp, 2014). They studied the effect of “temptation
bundling” in relation to gym. They couple instantly gratifying activities (the
“want” activity) with the target action (the “should” behaviour"). Sophisticated
individuals that are aware of their limited will-power would gain from such mechanisms
and would actually embrace them. Milkman et al set a plan by which gym attendees
may only listen to recreational material (audiobooks) when doing gym at the
club. They found that when this sort of “temptation
bundling” is imposed, gym attendance rose by more than 50%, although they also
found that the effects diluted over time. Non-monetary incentives can be a very
good way to induce commitments, but there have some limitations.
Commitments, even softer ones, are a
powerful way to alter behaviours. People are aware of their weakness to control
will-power, and are willing to engage in activities that impact on their future
choices. Commitments are more effective if costs in failing to comply are
higher. Public announcement of intentions may impose a reputational compromise
that ignites feelings of embarrassment. Even the act of writing the commitment
may create a stronger bond with the intended behaviour.
Involving these dimensions when designing soft
commitments, may end in systems with higher impact than harder, in particular
when they involve reputational risks.
As stated in the Mindspace Short Guide (Dolan, Halpern, Hallsworth, King,
& Vlaev, 2010) “We act in ways that make us feel better about
ourselves”. Our Ego is a powerful behavioural force shaping our conducts. Coupling
it with commitments may end up reinforcing in a great deal their effect.
When targeting behavioural change, it is
very important to take into consideration these kind of synergies, both when looking
at the behavioural forces in action, or when designing devices in the
intervention. Royer, Stehr and Sydnor worked on an interesting experiment
targeting the duration of the effects in gym interventions.(Royer, Stehr, & Sydnor, 2015) In particular they look for the relation between habit formation,
incentives and commitments in exercise. They matched a corporate incentivized exercise program
with a commitment contract. Half of the participants in the incentive program
where offered with a “self-funded
commitment contract” by which they commit to donate money if they fail to
continue with the program. Their focus was on “habit formation”. After one
month of economic incentives, and two months of commitment contract, habits
were strong enough as to have long-run effects on behavior, even after commitment
contract period had ended.
Gym
membership as a commitment device is a valid strategy to control will-power,
although it may not be infallible. Prepaying works a soft commitment, but as
showed, “payment depreciation” dilutes its effect as payment goes far on time.
Taking that
into consideration, a gym membership that makes salient the equivalent daily
payment may help in encouraging more gym attendance. However, increasing the
saliency of the payment may also drive the individual to a full cancelation potentially
leaving him in situation in which is less likely that he will end up showing to
the gym.
Adding positive
rewards to the gym membership plan may act reinforcing the desired behavior. Loyalty
programs that generate discount on future or present annual memberships in
relation to gym attendance may go in the right direction. For this reward to
have a higher impact, rewards should impact in the present (for example a
monthly rebate of their annual membership linked to gym attendance)
An additional
impulse can be gained by making the compromise public and giving “bragging
rights” to the individual who got his rebate by publicizing it with other gym
members. Finally, the addition of a commitment contract with a donation can
increase the chance of habit formation and long-term effects.
DellaVigna, S., &
Malmendier, U. (2006). Paying not to go to the gym. American Economic Review.
https://doi.org/10.1257/aer.96.3.694
Dolan, P., Halpern, D.,
Hallsworth, M., King, D., & Vlaev, I. (2010). Influencing behaviour through
public policy (Mindspace Short Guide). The Institute for Government for the
Cabinet Office. https://doi.org/10.1111/j.1753-4887.2009.00206.x
Gourville, J., & Soman,
D. (1998). Payment Depreciation: the Behavioral Effects of Temporally
Separating Payments From Consumption. Journal of Consumer Research, 25(2),
160–174. https://doi.org/10.1086/209533
Gourville, J., & Soman,
D. (2002). Pricing and the psychology of consumption. Harvard Business
Review, 80(9), 90–96, 126.
Karlan, D., Ashaf, N.,
& Yin, W. (2006). Tying Odysseus to the mast: Evidence from a commitment
savings product in the Philippines. The Quarterly Journal of Economics, 121(2),
635–672. https://doi.org/10.1162/qjec.2006.121.2.635
Milkman, K. L., Minson, J.
A., & Volpp, K. G. M. (2014). Holding the Hunger Games Hostage at the Gym:
An Evaluation of Temptation Bundling. Management Science, 60(2),
283–299. https://doi.org/10.1287/mnsc.2013.1784
Royer, H., Stehr, M., &
Sydnor, J. (2015). Incentives, commitments, and habit formation in exercise:
Evidence from a field experiment with workers at a Fortune-500 company. American
Economic Journal: Applied Economics, 7(3), 51–84.
https://doi.org/10.1257/app.20130327
