Rebates as Commitments: The Effects of a Gym Membership Reimbursement Program

Tuesday, June 25, 2019: 10:30 AM
Taft - Mezzanine Level (Marriott Wardman Park Hotel)

Presenter: Barton Willage

Discussant: Lacey Loomer

Can financial incentives induce health behaviors? We examine this question by evaluating a large-scale wellness program at a major university in the US. This program fully reimburses students’ fitness membership fees ($75) if they attend the gym at least 50 times during the semester. Given the increasing prevalence of health insurers reimbursing fitness center dues to encourage healthy lifestyle choices, this is a particularly interesting wellness incentive program to examine. To perform our analysis, we obtained individual-level administrative data on daily gym attendance for the universe of students over a five-year period, covering the three years that the policy was in place, as well as one year before it was implemented and one year after it was terminated. This provides us with 100.000 student-year observations and more than 1.5 million gym check-ins. We provide four sets of empirical results. First, we show that the program had a significant effect on gym attendance, driven exclusively by a change in the attendance behavior of existing members. Using a difference-in-difference framework, we find that individuals exposed to the reimbursement program increased their gym visits by almost 5 visits per semester. Second, we provide clear evidence of a bunching effect at the 50-visit threshold, consistent with a rational response to a non-linear incentive set with a considerable kink. Third, we demonstrate that the program did not have a negative anchoring effect among high frequency gym visitors. Finally, we show that the effect did not completely disappear after the termination of the program, providing evidence of a habit formation effect. These results suggest that rebates as wellness commitment devices can be successful in inducing healthy behavior.