A recent New York Times article documented a study in which people were paid by their Fortune 500 employer $10 a visit to workout at a gym for a four week period. Not only did many employees respond to the incentive but a significant portion of them continued to work out regularly for some period after the four weeks of $10 rewards ended.
That study is only one of many in which both governments and corporations are using various kinds of inducements to encourage individuals to make good decisions for their health and other purposes. Freedom of choice remains with the individual. But certain options, judged to be good ones, are promoted in concrete ways. Policy makers tend to like rewards: they point people in what's judged to be the right direction without commanding them to do anything. Educational campaigns, discussed in my last Post, extol healthier choices. Incentives offer tangible support for them.
Rewards are being experimented with in several areas other than health. We have long used the tax system to reward certain activities by providing preferential treatment: savings for retirement (RRSPs), for education (RESPs) and housing (no capital gains on principal residences). Another area involves measures to address traffic tie ups. There are "sticks" being used such as "congestion charges": levies imposed for using high traffic areas at peak times etc. But "carrots" are also being experimented with: for example, "Capri" (Congestion and Parking Relief Incentives). Sponsored by the U.S. federal Department of Transportation, "Capri", a program in California, allows people driving to traffic-clogged places of work to enter a daily lottery with a chance to win up to an extra $50 in their pay cheque if they shift their commute to off-peak hours.
The gym rewards program, discussed at the beginning of this post, is a good example of incentives to encourage physical activity. Another one is the Children's Fitness Tax Credit (CFTC). A voucher, available through the tax code, promotes involvement while also providing choice to parents and their children regarding which activities to participate in. It also encourages positive competition on the part of service providers as they seek to persuade the beneficiaries of the subsidy to spend their dollars with them. Some aspects of the CFTC have been rightly criticized and it needs to be strengthened. It is still an important means of lowering costs and increasing access for kids' participation.
This interest in rewards to (re)shape behaviour has also been taken up by those wishing to promote healthier eating. A particular focus is on individuals and families with low incomes. Incentives to eat healthy foods that target the poor can both promote nutrition and increase food budgets for those who have an obvious need. The US Institute of Medicine has recommended that governments consider incentives, through the tax system and otherwise, to encourage companies that promote healthier food and beverages for children in settings where they typically consume them. There is an interesting experiment going on in Massachusetts: the Healthy Incentives Pilot (HIP). HIP offers those on SNAP (food stamps) an incentive, a 30 per cent bump up, if the stamps are used to buy stipulated nutritious foods. HIP has been rigorously evaluated with quite positive results. Similarly, there could be inducements for small food store owners in underserved areas to carry food items that are healthier and more affordable.
Governments and the private sector should engage in more of these experiments, particularly in terms of promoting healthy choices. But rewards usually have costs associated with them. (If we give someone a tax break to encourage an activity we have to make up the lost revenue somewhere else) In these cashed-starved times, especially in the public sector, governments and others may shy away from such price tags. Yet if incentives work they can save a lot of dollars over time for the health care system etc. Governments need to take the long term view, especially in terms of well being. But that's easier said than done.
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