How to Use Loss Aversion to Make Your Wellness Program More Effective

How would you feel if everyone younger than 65 were charged an extra $3 at the movies? If you’re under 65, probably not too good. However, seniors receive $3 movie discounts all the time and we don’t think anything of it because it’s a discount for a few, rather than an up-charge for the many. This is due to an idea called loss aversion, the human tendency to strongly prefer avoiding a loss to receiving a gain. Psychologists claim that the pain of losing can be twice as powerful as the pleasure of gaining. Used in the marketing and finance fields all the time, the fear of losing something can be a powerful economic force.

Loss aversion techniques have already been tested to see if it helps employees to stick to their wellness goals. In a study conducted by the University of Pennsylvania, participants were given a daily goal of taking 7,000 steps. They were then divided into three three inventive groups: gain incentives (a gift every day the goal was reached), a lottery incentive (entry into a lottery program), and loss incentives (a small amount of previously gifted money taken away every day the goal was not met). The study found that participants were 10% more likely to reach their step count if they were a part of the loss incentive group.

The real key to incorporating loss aversion techniques in a corporate wellness program is to use the correct language. For example:

• Instead of offering employees incentives once wellness goals are met, provide them with an automatic financial incentive that can be taken away if certain wellness or fitness goals aren’t reached. Many IncentFit customers do that by providing a health insurance premium discount that goes away if the employee doesn’t exercise regularly
• By law, employees can offer reduced premiums of up to 50% to non-smoking employees. As a part of your corporate wellness program, make sure to advertise that smoking employees will receive an increased health care premium.
• Incorporate “twinkie taxes“, a surcharge for unhealthy food, in vending machines, and make it known that an additional cost is being charged because the snack isn’t nutritional.

Although these methods don’t seem like much, loss aversion is a real behavioral phenomenon that can grant a huge boost to the effectiveness of your corporate wellness program. At IncentFit we frequently use behavioral science tehniques like this to boost engagement. Ask us how you can make the switch from gain incentives to loss incentives at your company today!