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Today in Your Health, expensive pills with no active ingredients work better than the same pills that cost a lot less. We'll explain in a moment. First, betting that you can lose weight. Some economists are convinced that the prospect of financial loss is a real motivator. NPR's Allison Aubrey reports on a new weight loss Web site that will give your money to charity if you fail to lose the pounds you promise.
ALLISON AUBREY: Last fall, Julia Good-Stefania(ph), a student at Yale Law School, decided she needed some extra cash, so she checked out the postings on a campus employment site and ranked them by salary.
Ms. JULIA GOOD-STEFANIA (Student): And the highest paying job was this odd position to basically be an assistant to a professor and part of the duties included nagging.
Ms. GOOD-STEFANIA: Nagging.
AUBREY: And what did you think about that?
Ms. GOOD-STEFANIA: I had no idea what nagging entailed, but I liked the pay, so I emailed the professor.
AUBREY: And as it turns out, the professor, an expert in contract law named Ian Ayres, hired her. He explained to her that he set a goal of losing 20 pounds, as he'd done many times before. And this time he wanted some external system of nudging. He learned from experience not to saddle his wife with the job.
Professor IAN AYRES (Yale University): She does not like taking on the burden of nagging me. And we don't think that it is conducive to domestic tranquility. So that's one of the reasons that I went out and hired a student.
AUBREY: Good-Stefania would send him emails, gentle reminders, and she became the keeper of the inspector of his swimming logs and meal logs, reporting how much he'd exercised and eaten.
Prof. AYRES: The nagging system was a way to keep my eye on the prize.
AUBREY: Ayres also bet his friend, an economics professor named Dean Karlan, $500 a week that he'd lose the weight. It's a bet that Karlan says he was happy to take.
Professor DEAN KARLAN (Yale University): Well, I have to fund my research somehow. So...
AUBREY: Karlan laughs facetiously because his instincts told him he would never take a dime of his friend Ian Ayres's money. Through his experiments in behavioral economics, Karlan says he's learned that some people are more likely to act in their own self-interest if they sign a contract.
Prof. KARLAN: There are a significant portion of people that have an explicit preference for commitment.
AUBREY: Karlan describes a recent effort in the Philippines to help smokers quit. Through a local bank the smokers signed agreements to put their cigarette money into savings accounts and agreed to urine tests. At the end of six months if the tests showed they had nicotine in their system, their savings was lost, given to charity.
Prof. KARLAN: It was wildly, wildly successful. The people who took up the account were about 30 percentage points more likely to stop smoking.
AUBREY: At least temporarily. The results exemplify what economists call prospect theory, or loss aversion.
Prof. KARLAN: What we know about incentives is people work a lot harder to avoid losing ten dollars than they will work to gain ten dollars. Something that is framed as a loss is really effective at changing behavior.
AUBREY: The other principle that's at work here is something economists call time inconsistencies, meaning my actions of today, maybe eating that extra cookie, are completely inconsistent with my stated goals of tomorrow, losing weight. So when a contract binds people to losing a certain number of pounds by a certain date, it may help bring today's actions in sync with tomorrow's goals.
Prof. KARLAN: It's worked for me.
AUBREY: Ayres lost 20 pounds last year, and an ongoing bet helps him keep it off. He loses $500 a week if his weight starts to inch back up.
Prof. KARLAN: The big question is, can it work for other people too?
AUBREY: Ayres and his colleague Dean Karlan think it can. They've recently started a Web site. They call it StickK.com, that's stick with an extra K.com, as in stick with it. It's a free service that will send you email nudges and reminders, help put you in touch with the virtual community. If you don't meet your goal, your money goes to charity or a person you designate.
Ayres and Karlan may ultimately make money through advertising if the site's successful, and they also hope to form partnerships with perhaps gyms or other clubs where people could weigh in and verify their goals are being met. This concept of gaining weight loss may become trendy, says economist John Lynham of U.C. Santa Barbara, but it's not exactly new.
Mr. JOHN LYNHAM (Economist): Since about 1993, William Helm(ph), a bookmaker in the United Kingdom, has been accepting bets from individuals who want to bet on their own weight loss.
AUBREY: Lynham has studied the results of about 50 bets and finds the London betting house is often the winner.
Mr. LYNHAM: We find that about 80 percent of people lose their bets.
AUBREY: Despite these failures, Lynham says he thinks the concept of StickK.com may be a winning one. He explains the betting house sets people up to lose by upping the odds and pay off on huge unrealistic amounts of weight. Structured differently, like StickK.com hopes to do by helping people set incremental, measurable goals, the results may be different.
As for law student Julia Good-Stefania, who took the job of professional nagger, she says she's intrigued by the commitment system, but she's not interested in a formal contract for herself, at least not this spring.
Ms. JULIA GOOD-STEFANIA: I definitely have girlfriends that are going on spring break together and we've all sort of set personal goals sort of before we go sort of running around in our bikinis and where we'd like to be, and I think it helps to set your goals with your friends, because it's a little bit less scary.
AUBREY: But to those of us who don't have a group of friends to diet with, Ian Ayres and Dean Karlan plan to find out if contracts and a virtual network can help.
Allison Aubrey, NPR News, Washington.
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