Some of us have too many bad habits, such as smoking, and too few good ones, such as exercising

1. Incentives and Habits • Some of us have too many bad habits, such as smoking, and too few good ones, such as exercising • Could incentives be used to “improve” peoples’ habit formation—reducing the bad ones and increasing the good ones? • “Behavioral Interventions” • I will present some success in increasing positive habits—and a challenge of reducing bad habits.

2. Part 1: reinforcing good habits, with Gary Charness (UCSB) • People don’t exercise enough - bad for health and obesity • Can we use incentives to make people go more frequently to the gym? • In the short run (when the incentives are present) • In the long run (after the incentives are removed)

3. 120 students - 40 in each of 3 treatments • Participants were invited to an experimental lab • Read a short article describing the importance of exercising and answered some questions • They were invited to come back to the lab one week later to answer some more questions • Each received $25 for the two times they came to the lab • For the control group, that was all we did

4. In the other two groups, we told participants that they must go to the gym at least once during the week • We got the data about the visits from the gym (computerized) • Upon arriving back to the lab in the second week, people were randomly assigned to one of two groups • Incentives for one week • Incentives for five weeks

5. For the one week group - that was the end of the study • For the four weeks group - we offered extra $100 to go to the gym at least 8 times during the following 4 weeks • To sum—three treatments: • No incentives • Incentives for one week • Incentives for one + four weeks

6. Two competing hypotheses • First hypothesis: Crowding out • Empirical findings suggest that sometimes paying people to do an activity might • help in the short run (while the incentives are present) • but be detrimental in the long run - once the incentives are removed • People who receive $100 to go to the gym 8 times might go more frequently while the incentives are present, but once the incentives are removed will go less frequently than the control group

7. Second hypothesis: habit formation • Becker and Murphy • marginal utility today is positively correlated with historical consumption • changes today can have small effect in the short run but increasingly large effects in the long run • By paying people to go to the gym for few weeks we increase the marginal utility of future visits

14. Implications - e.g., education • Should we pay kids for success in exams? • Some recent findings show that paying students help in the short run (when the incentives are present) • But what are the long run influences of this • Destroy intrinsic motivation? • “I learn because I’m paid and not because it is important/fun/…?”

15. Bad habits, with Harriet de Wit (Chicago) • Cigarette smoking is a major health problem • Over the years, researchers have used different methods to encourage and motivate abstinence • Examples include: • individual and group counseling • pharmacological interventions • inpatient and outpatient treatments • support groups • workplace interventions • family therapies

16. Many used rewards and punishment to influence voluntary behavioral adaptations • Assume: Smoking behavior could be changed using extrinsic incentives • The background theory--operant conditioning (Skinner, 1938, 1972) • The idea is that behavior is learned and reinforced by interaction with environmental contingencies • Because behavior is controlled by its consequences, it can be changed by changing its consequences

17. First step: show that people behave differently than starved pigeons • In the first study we plan to extend the findings of Gneezy and Rustichini (2000) to the study of reinforcement of smoking abstinence using monetary incentives • Show(?) that monetary incentives contingent on smoking cessation may actually interfere with future attempts to abstain

18. The study • Recruit cigarette smokers who are not currently planning to quit • Three treatments consisting of two parts, each part consists of three days • All participants receive monetary compensation for participating • They are all asked and encouraged to abstain from smoking during the two parts of the study

19. Part 1 (three days) • Treatment 1: Participants will not receive additional contingent monetary incentives • Treatment 2: Participants will be paid a small ($1) compensation for every day in which they will not smoke. • Treatment 3: Same as treatment 2, but with a large monetary compensation ($20)

20. Part 2 (three days) • This part will take place four days after the end of part 1 • In this part, all participants will be asked and encouraged not to smoke • No additional incentives will be used

21. Predictions - Part 1: • We predict that in part 1, treatment 3 will be the most successful in terms of participants not smoking • In contrast with Skinner’s operant conditioning model, we predict that treatment 1 will be more successful than treatment 2.

22. Predictions – part 2: • We predict that treatment 1 will be more effective than the other two treatments • The reason is that participants, who were paid before, will not refrain from smoking when this is not extrinsically rewarded • Note that this is of great relevance to the debate regarding the long term effect of incentives on smoking • Even incentive programs that are successful while the incentives are present might be counterproductive once the incentives are removed