Bet the Money and Run: Incentive Based Weight Loss

BACK WHEN DEAN KARLAN was in grad school, he did what sounds like an incredibly idiotic thing. He told a pal that if he, Karlan, didn't lose weight, he'd give him $10,000 — half his annual income. As it turns out, the Yale economics professor isn't a dummy. Karlan dropped 38 pounds and has kept off the weight with similar deals ever since.

"People respond to incentives," he explains. Karlan figured monetary motivation could spur on other folks brawling with blubber who need more than the allure of a sound body. So, he's teamed up with Ian Ayres, a Yale colleague, and Jordan Goldberg, a Yale business school student, to create a Web site devoted to keeping resolutions by putting cash on the line, Stickk.com, which launches this week.

Members start by selecting a commitment type, which can be either the site's standard weight loss, fitness or quit-smoking options, or they can craft a goal of their own. Then, the choices multiply.

You can bet money or just your word. If you pick the former, you choose who gets the cash if you fail — a friend, a foe, a pool of non-controversially good charities, such as UNICEF and the United Way, or an anti-charity (like a gun-control group if you're an NRA fan, or vice versa). You can select a referee, who checks on your efforts. To keep you on track, you can name a support group of people who will get updates on your progress. "If they fail, they feel like they're letting their friends down as well," notes Goldberg.

But the biggest sting is supposed to come from losing dough, so the idea is to turn over enough that you have no choice but to be good. Take Goldberg's contract, for instance. He's looking to gain weight by exercising at the gym at least three times per week, but he'd rather sit on his couch watching TV. With $50 on the line each week, though, that means the "I Love New York" marathon has to be pretty spectacular.

If someone is hoping to lose two pounds per week, which is the most the site allows to keep goals healthy, the same principle will apply to a large slice of chocolate cake. The menu might list the price as $6.95, but to a Stickk.com member, it could be an outrageously expensive $106.95. "It's not that money works better than health. Even without this contract, it costs more money to be unhealthy," says Karlan, noting the toll of higher medical bills. "It just doesn't cost enough."

The idea isn't entirely revolutionary. After all, tons of people have made bets with buddies to do healthier things. But Goldberg sees the difference of Stickk: "You can't renege." And while companies have started to provide rewards for employees who attend healthy living seminars and such, Karlan believes that will never be as motivating as putting up your own money.

"The thought of losing $100 will inspire you to do things that the chance to win $100 won't," he says. That includes finally taking care of yourself.

» STICKKING TO IT

» How does Stickk.com make any money?
It doesn't — except through ads. You give them cash up front for the length of your commitment, which can't be longer than a year. That money either goes back to you if you succeed or heads to the designated party if you fail. They make no money off of your failures.

» Can I get out of my contract?
You can always lie. But it's not recommended. With a doctor's note, though, Stickk.com will release you.

» How much money should I put down?
Karlan recommends no more than 10 percent of your income.

» Wouldn't designating a charity give me incentive to fail?
The key is not knowing which of the charities you're contributing to. Without that information, it's not as psychologically satisfying. And no, you don't get a tax deduction.

Image courtesy iStockPhoto