Listening to Las Vegas

Casinos have made a science out of winning money.  Here’s how benefits managers can apply the gaming industry’s strategies to design more effective wellness incentive programs.

Imagine if Las Vegas casinos consisted of plain warehouses with schoolhouse chairs, cafeteria tables and artless pick-a-number gambling games—remove from your mind today’s fun, pop culture-themed video slot machines beset in elaborate casino resorts, with soft chairs, free liquor and scantly-clad servers.  Imagine further that the pick-a-number gambling games were one-shot events:  you find out in one announcement whether you won or lost and then go home.  Las Vegas would hardly be more than a dusty desert town, much less the worldwide tourist destination that it is today.

vegas_welcomeLas Vegas casinos motivate scores of gamblers and curious non-gamblers from all over the world to make the trip to spend money in Las Vegas every year, despite the well-known fact that the odds generally favor the house.  Economics counsels players to stay home or at least keep their wallets in their pockets, but Las Vegas alters their perceptions and convinces them to engage anyway.

Las Vegas developed itself into a leviathan over the course of decades by honing a variety of principles and strategies that exploit human psychology and sociology; affect participant perceptions about the economics of gambling in Las Vegas; and provide gamblers with a fun, exciting and glamorous experience.

The principles and strategies range from core aspects of gaming, like betting and lottery games, to subtle but important strategies, like making a fuss over winners and making sure that each player is compelled to participate in a protracted series of small transactions.

Like the gaming industry, wellness incentive programs use the prospect of winning money to drive activity and engagement.  We examine some of Las Vegas’s most important principles and strategies, which benefits managers can and should use to optimize wellness incentive programs.

Betting (i.e., an arrangement that consists of both a penalty and a reward).

Betting forms the bedrock of Las Vegas financial games, and almost all Las Vegas games revolve around the thrill of the opportunity to win money and the anxiety of prospective loss.  The combination is so thrilling that, despite the odds of (not) winning, people from all over the world make the trip to Las Vegas to place bets en masse.

And betting provides another benefit that is oft overlooked in Las Vegas, but which is very important tofinancial wellness incentives.  People rarely walk away from a bet they have made.  They have a need to find out whether they won.

It should not come as a surprise that almost all of the recent academic research on wellness incentives

weight-scale-0710-s3-medium_newhas included betting or other Vegas-like elements (i.e., combinations of penalties and rewards/prizes).  A 2008 randomized, controlled study (the “JAMA Study”) conducted by Kevin Volpp, Ph.D., a professor of behavioral economics at the University of Pennsylvania); George Loewenstein, Ph.D., a professor of economics and psychology at Carnegie Mellon University; and Leslie K. John, a professor at Harvard Business School, et al., found that adding betting or a lottery to weight loss interventions can make the interventions three times more effective than the interventions alone would be.  The results were published in a 2008 article in the Journal of the American Medical Association.[1]

The JAMA Study divided participants into groups, including a control group and a betting group (which Volpp and his colleagues euphoniously referred to as the “deposit contract group”).  The participants in the betting group were asked to make a monetary deposit (i.e., a bet) at the beginning of a weight loss program, and were told that, if they achieved a certain amount of weight loss, they would receive back twice their deposit plus a variable additional prize.

The result was that participants in the deposit contract group lost more than three times more weight than the participants in the control group.  The results held true regardless of how the researchers examined the data.  For example, people in the control group experienced mean weight loss of 3.9 pounds compared with a mean 14-pound weight loss by subjects in the deposit contract group.  More dramatically, “[t]he percentage of participants losing at least 20 lb was 36.8% . . .  in the deposit contract group . . and 5.3% [more than seven times lower] in the control group.”  Similarly, “[a]lthough only 10.5% . . . of control participants attained the 16-lb weight loss goal, about half of the incentive participants did . . . [including] 47.4% [almost five times more] in the deposit contract group.”

The researchers explained that outcomes were the result of several effects identified in psychology and behavioral economics literature, including that “even small rewards and punishments can have great incentive value” when they occur immediately (that is one of the reasons why short term monetary rewards work better for motivating weight loss than long-term health rewards).  The researchers also concluded that the incentive programs took advantage of peoples’ tendency to remember past rewards and be excited about future ones, and by people’s desire to avoid feelings of regret.  The researchers also explained that the deposit feature (i.e., making participants put some of their own money at risk) “is a powerful mechanism for inducing behavior change that is based on loss aversion . . .

In another study (the “NHS Study”), conducted by Britain’s National Health Service, researchers found that the results of Pounds for Pounds—an NHS-approved, financial incentive plan in Great Britain—weight loss betting program produced results at least as successful as other non-medical weight loss plans, like Weight Watchers, dramatically increased each participant’s likelihood and level of success.   The results were published in a 2011 article in the Journal of Public HealthSee “The ‘Pounds for Pounds’ weight loss financial incentive scheme: an evaluation of a pilot in NHS Eastern and Coastal Kent”, C. Relton, M. Strong, J. Li, J. of Pub. Health March 2011.

In another study at United Healthcare’s Optum Health unit, participants made a $100 “bet” on whether they would lose 10% of their weight in the next six months, and were paid $400 if they succeeded. The Program led to significant weight loss for a stunning portion of participants—male participants in particular. 63% of male participants lost at least 10% of their weight, and thereby successfully completed the program. Overall, 29% of participants lost 10% of their weight, and thereby successfully completed the program.

When designing wellness incentives, the research is clear that “betting” is a Vegas-like tool that can be used to maximize behavior change.

Structured peer pressure

Group-weight-lossSome of the most exciting games in Las Vegas, from craps to horse racing, render a participant’s outcome contingent upon the successful actions of some other person.  The result, even when the other person is responsible for nothing more than rolling the dice, is strong social pressure.  For example, in a team sport competition, such as paired golf tournament, each player exerts tremendous pressure on his/her partner or teammates to achieve a successful outcome.  Even in blackjack, which is not a team game, players pressure one another to avoid taking unnecessary cards because all of the players are hurt when the dealer manages to avoid a bust.

Similarly, many dieters struggling to lose weight, require peer pressure to stay accountable. Simple ways to harness peer pressure include group meetings (similar to Weight Watchers) or wellness coaching where the desire not to let down your coach can be a very personal and powerful motivator

When designing wellness incentives, one easy way to harness the power of structured peer pressure is to make an employees’ wellness incentive contingent on a colleagues’ behavior change. This type of interlocked incentive scheme will drive results and facilitate a collegial culture of health.

Competition

Many of the most famous Las Vegas games, from poker to horse racing, involve competitionskd183567sdc between the participants in which each participant’s outcome is dependent on his or her success relative to the success of other participants.  The competition drives participants to achieve their best and provides the unique thrill of winning a competition.

Incorporating a competition with a prize can spur colleagues to action and positive behavior change. Where possible, allocate a portion of your wellness incentive budget to the winner of an internal competition. Common competitions in the workplace include physical activity, weight loss, and healthy behaviors.

Frequent transactions/prizes

Slot machines and table games involve a series of many small transactions that protract the excitement and resulting engagement.  Over the course of four hours, a

slot machine player might “pull the level” more than 500 times.  In the same four-hour period, a black jack player might play 50 or more hands.  The result is much longer, more meaningful engagement.

Wellness incentive designers would be well-advised to include this component, which can help ensure that the incentive program is more than just an initial shot of excitement, and that it is an ongoing source of excitement that encourages people to attain and maintain their goals. Where possible you should pay participants monthly, or at least quarterly. Annual wellness awards may be lost on some participants.

Opportunity to win large cash prizes

Many Las Vegas games provide an aggregate prize that players falling-cashcan win in addition to the prizes associated with a particular games.  For example, many slot machines offer a chance to win not only the prizes unique to each machine, but also some very large prize(s) (e.g., a car; a million dollars) that is shared by a group of slot machines or even an entire casino of slot machines.

Well-designed wellness incentive programs should incorporate some sort of chance to win a big prize. This can be through lottery/drawing. You will find greater engagement and results by incorporating a large prize.

Making a fuss of the winners

Trophy Winners Celebrate Sports VictoryIn Las Vegas, wining is seldom a quiet affair.  Las Vegas casinos understand the importance of making a fuss over winners with ringing bells, balloon drops, confetti, elaborate check presentations,

Where possible, highlight your employee successes as part of your wellness incentive program. Interview employees who have made a significant life change and blow out their success to motivate and others to participate in the wellness program. Share the before + after photos. Interview them. Bring them to the CEO to talk about how your program has positively impacted their life.

As you think through your wellness incentive program, think about all of the exciting things about Vegas. Harness those principles and your employees will have a blast and take advantage of your incentives.


[1]   See Volpp, K.G., John, L.K., Troxel, A.B., Norton, L., Fassbender, J., and Loewenstein, G., “Financial Incentive-based Approaches for Weight Loss: A Randomized Trial,” J. of the Am. Med. Ass’n, 300(22), 2631-2637 (2008).